The Startup That Wouldn’t Die
Celebrating four years of pivots, reboots, persistence and eventually, profitability.
Facebook reminded me that today is the four-year anniversary of launching Lift. It’s also the seven day anniversary of becoming profitable.
Lift started as a personal project called Mibbles and morphed into the current company, Coach.me.
Coach.me is not a startup unicorn (slang for worth $1+ billion dollars) and isn’t anywhere close to becoming venture scale and yet, somehow, we aren’t dead. I’m celebrating.
Earlier this year, I took the screenshot below. It’s the moment we crossed $1 million dollars in revenue.
A part of me was afraid to celebrate this moment. I can’t find a link, but I’m 99% positive that Ted Rheingold expressed a sentiment about his old startup, Dogster, along the lines of:
“Why does everyone congratulate you when you raise $1M, but not when you earn $1M?”
Startup culture has a weird value system.
For example, last week was our first week of profitability. That’s great news for the company and for our community: we stopped being a constant risk for going out of business.
The investor reaction to profit is more complicated. More on that below.
Mostly though, I feel gratitude. Gratitude that we didn’t die. Gratitude that the community has been so supportive. Gratitude for all the people that helped out.
Here were some of the big adventures and lessons along the way.
Enjoy the Journey
There’s a lesson I learned during my first startup, CrowdVine:
Work on stuff that matters. That way at least you’ll love the journey.
For CrowdVine, I bootstrapped for three years. Literally, I was making no money and pouring all the revenue back into the company.
If the company had a mission statement it would have simply been, “Don’t Fail.”
In year four, CrowdVine had outlasted several copycats, had built a team that was mostly running the company on my behalf, and I was splitting my time between NYC and SF.
I’d achieved the dream of every lifestyle business.
But CrowdVine was the wrong company for me. I liked, but didn’t love, everything that we did. I didn’t even love having leisure time.
So I started a side project with one goal: do work that I enjoy.
Is that selfish? I don’t see how anyone could stick with entrepreneurship otherwise. You absolutely have to love the journey or you’re only going to be happy when things are going well.
And things usually don’t go well.
Right Mission, Wrong Approach, Bad Product
At this point I should probably mention that I’m not really a product guy or designer or marketer or sales person.
I’m just a productive engineer and (if I need to be) engineering manager.
I knew my mission: Use technology to push the boundaries of human performance.
But I didn’t have any actual skills that would help me design that technology. Or build a business around it.
So, like a lot of rookies, I started out making cargo cult product decisions. That’s when you copy other people’s designs based on faith rather than actual understanding.
Mostly what I saw other people doing was gamification. So I tried that.
Here’s my wireframe for the first version.
Gamification has now gone out of favor for a number of good reasons. But my critique is very narrow along the following line.
In self-improvement, participants carry around a fantasy of who they might become and how their life might be better.
Naked game elements, like points, avatars and badges, imply a separate fantasy. When you combine the game fantasy with the self-improvement fantasy, you end up with competing fantasies. That’s a fail.
So you have to redesign your gamification with real life elements.
Strava is the company that does this best. Every bike ride has at a half-dozen ways to win, either through personal bests, daily and all-time leaderboards, segment bests, visualizing people you passed and challenges.
But all of those Strava wins are based on real life achievements.
With help, we eventually gave up our naive gamification and moved into social reinforcements. That’s just smarter, more subtle gamification.
Go Big or Go Home?
As I was struggling to figure out what to do with Mibbles, I took Ev Williams out for coffee. Actually, he had tea and I had milk and a cookie.
If you’re cargo-culting how to raise money from Ev, these details might matter.
However, if you want to know the real way to raise money from a casual meeting with Ev, here’s the secret: work for him first.
These sorts of investments are only partly about luck. He was my boss in 2005.
Ev liked the idea of Mibbles and thought we should work on it together. His only stipulation was that we change the name. He’s the one who suggested Lift.
At this point I started to think something incredibly naive.
I thought the company was going to succeed. Just because we were putting together a strong team, I thought we were guaranteed to be at least a minor success.
I feel dumb for this — I completely confused promise with progress.
Progress is users and revenue. Everything else is promise.
Too much promise and not enough progress hurts. We had that for a long time.
Too Soft to be CEO
Very few people talk about the times they failed to raise money.
We’ve succeeded three times and failed twice.
I found the failures to be much more helpful.
The first time we failed, several VCs told me that they were passing on me personally. Everything about the company seemed promising except for me.
They thought I was too soft to be a CEO.
That’s tough feedback to hear.
For one, I didn’t agree that I was soft. For two, I didn’t know how to transform into an aggressive asshole in time to complete the fundraising.
And for three: I DON’T WANT TO BE AN ASSHOLE.
The thing about this feedback was that it ended up being enormously helpful.
The investors were completely right. I was way too soft.
I just didn’t know what my version of hard was going to be. I started by trying the asshole approach and that was a disaster.
We’d heard that one of the investors we were meeting was incredibly competitive. So we walked into the meeting ready to bluff and manipulate him.
Literally, I walked in and just lied, lied, lied. It was exactly like the Erlich Bachman fundraising scene from Silicon Valley (minus his last antic).
My key line was, “This deal is closing next week with some of the greatest entrepreneurs in the valley — what could you possibly bring to the table that would make including you worthwhile?”
If you want more of this nonsense, here’s the Erlich Bachman version, appropriately titled, Negotiating with Hostility and Rudeness:
I was being an idiot with that investor. Thankfully, I ended up feeling bad about lying — I might have gotten the money but then I’d be stuck in that broken relationship. And I’d be a liar. So we walked away.
Mostly though, I was happy that the other VC’s gave honest feedback. They could have said something polite, like “Not enough traction.”
But now I’m thankful that they were so blunt.
As a CEO, I thought I was being collaborative. But my softness always caused problems when I knew we had to go one direction and I dragged my feet about making that happen.
Becoming harder meant being clear about what mattered and doing it fast. Anything else was just me wasting people’s time and money.
Actually Raising Money
I beat myself up after failing to raise money. So I ended up being incredibly surprised when the situation flipped.
I’d set up a meeting with Bijan Sabet at Spark. But I’d forgotten to put the meeting in my calendar. In fact, I’d completely forgotten that the meeting even existed. Or who Bijan was.
So I was extremely confused when Bijan showed up in our lobby. I thought he’d invited himself. Rude, right? I was pretty close to telling him to go away.
But I took the meeting and gave the absolute, most unprepared pitch of all time. And it didn’t matter.
There are times when you are fundable and times when you aren’t.
When you’re in a fundable moment, it almost doesn’t matter what you do.
Bijan invested and ended up being really crucial to Lift. He has since stepped down from the board gracefully. But I only have love for him. He gave me so many opportunities even when I didn’t think I deserved them.
The pivotal moment in how I feel about him came as we were raising a bridge round. It was a tough raise and his partners were suspicious. We had maybe a million users and they probably wanted us to have twenty million.
But they agreed to a term sheet and I momentarily thought we had dodged a bullet.
Then, two days before Spark was supposed to wire us the money, we got some, really, really bad news. My co-founder decided to quit.
This was news I would have wanted to hear either before raising or after. I was 100% sure that Spark would pull the term sheet and that we’d go out of business.
In hindsight, my co-founder made the right decision for himself and he shared his decision as soon as he was able. I can’t fault him for that.
I texted Bijan something like, “Urgent. Can you call me today?”
And when we talked he said two things.
- “When I got your text I thought it was either that you have a health emergency or that that your co-founder quit. So I’m happy it was the latter.”
- “We’re going to go through with the investment.”
What more can you ask of an investor? Bijan was loyal and came through in tough moments. This is not the stereotype that I’m used to.
I have a slew of good things to say about Bijan’s help as well. He was helpful when he could be and clear when he couldn’t. As they say on eBay, “A+++. Would recommend.”
Plus Bijan was a good sport about starting our board meetings with a meditation.
Best Vanity Metric
Vanity metrics get a bad rap. But I like them.
The vanity metric we use is “Per Employee Coach Multiplier.”
That’s best expressed in the following sentence.
“Your work today is the equivalent of 1,180 coaches working individually with clients.”
I love that metric. I could go into a private coaching practice any time. I might even make more money that way. But I could never have that much impact individually.
This metric is probably 80% of why we didn’t die. Even when we weren’t succeeding on a venture scale, it was hard to feel like we weren’t succeeding on the much more important metric of positive impact.
Trade Marks Are Dead
The only thing that matters is mindshare.
For awhile, Lift was a great name and one of the greatest logos of all time. Flush with venture capital, we had logo master Louie Mantia and his team create a logo for Lift. (He’s industry famous for doing the Square and iTunes logos.)
But then we got killed by the cab company, Lyft. There’s no trademark defense. They just got huge fast and suddenly we were introducing ourselves as “the other Lift” at parties.
We rebranded as Coach.me. And I got a lot of angry email from our community about the name change.
I tried to respond in the most direct way possible.
Either we keep the Lift name and definitely go out of business. Or we change our name and maybe go out of business.
I’m glad we changed our name.
The name change coincided with a business model. We’re trying to re-invent coaching as a service that works for everyone, everywhere, for every goal.
That means taking advantage of messaging. There are a number of powerful things about moving coaching online, but the one I’m most proud of is quality.
Messages are trackable and measurable.
The coaching industry is an unregulated mess. Because most of our coaching happens online, we’re the first people to ever measure which coaches get the job done.
Thankfully, coaching is a win-win business. Clients spend money when they experience success. We funnel clients to the coaches that make the most money — that’s the magic. Everyone wins.
Having revenue kicked off a three way race between getting profitable, finding even more investment, and running out of the money we already had.
We ended up losing the fundraising race. This was the second failed fundraise. It’s for a different post — but the investors were right. We have an idea, but it’s too early on a number of fronts.
However, we did win the profitability race. Last week was the first week we were profitable.
To get to this point, we had to get a lot smaller. There’s no more venture capital to spend — just revenue.
I used to think the term right-sizing was cynical. Maybe that’s how other people use it.
But having gone through it — the new size does actually feel right in a way that the old size didn’t.
The old size was artificial and fake. The new size is appropriate.
Here are three truths about startup right-sizing.
- It hurts bad. Both sides are hurt, but in different ways. Only half of the people who left Lift/Coach.me still talk to me.
- Both sides are happier within 30 days (usually) and always within a year. Quitting or getting fired by me is a great way to get wealthy.
- The company is healthier. Often we got more productive by getting smaller. More subtly, we were able to shift from wild-bets-to-save-the-staff to appropriate-investments-with-high-success-rates.
I wish people talked more openly about switching gears. Startup culture basically has two gears, raising and dying.
But I’d rather have three: dying, natural growth, unnatural growth.
Sometimes you aren’t ready for unnatural growth, i.e. venture funding. GitHub for instance went years before raising money.
I’m happy that we took venture money. We took a swing at doing something huge at a time when the App Store was growing incredibly fast.
But that opportunity went away.
When that happened, I wish we had switched gears much faster. We could have been profitable a year ago with a lot more money still in the bank.
Looking forward, I don’t see any reason we couldn’t find ourselves in a venture suitable line of business down the road.
Profitability is obviously great news to the team and our community.
But investors are squirrel-ly about it. Going out of business isn’t great for them. But staying in business probably annoys their CFO — more paperwork for no visible return.
In any case, whether our investors are celebrating or not, I’m grateful for their help.
Part of real improvement is being able to talk truthfully about the hard times. That’s what the above was about. It was four hard years, punctuated by some really difficult moments.
But all of that work is what makes today so satisfying.
- Every day we help people reach their goals. That continues today through our self-tracking tools.
- Now we also help hundreds of coaches run their businesses.
- I didn’t quit. I honestly am surprised. And proud of myself. Is that okay to say?
- I’m proud of the people who used to work here. A number of them made huge career leaps, including going on to found companies themselves.
- We have a future. Marc Andreessen has a quote that I love, “People underestimate the competitive value of time.”
Plus, about once a day someone writes to us saying that we changed their lives. What else could I possibly want from a job?
Our current path is of maintaining reasonable, healthy growth.
- I’m writing every day. This is post 19 of my daily blogging habit.
- We’re running a small private coaching group based on finding the most current and cutting edge productivity research. Join if you want to be coached by me.
- We have a new coaching membership program to help coaches be more successful. A lot of my software development time is going toward improving our coaching tools.
- Our coaches coach thousands of people each month and our intention is to bring in more and deeper levels of coaching (for example our recent executive coaching program).
- And 90% of our users are part of our self-coaching community. The foundation of this is what I still believe is the best goal tracking tool in the world.
If we do that — then I think everyone involved in the company can make a claim to have helped change many lives for the better.