The Myth of Overnight Success

Painful Hurdles That Some Famous Entrepreneurs Had To Jump On The Road To Success

“It doesn’t matter how many times you fail. You only have to be right once and then everyone can tell you that you are an overnight success.”

— Mark Cuban

The Road To Success … Perception vs. Reality

Because the media mostly cover startups after they become successful, many people tend automatically associate startup life with glamour, fame and fortune.

There are those who think that startup success is basically broken down into 4 few quick steps as follows:

1. Come up with an idea
2. Build a product that you think everyone wants … Or if you can’t code, get someone to build it for you
3. Get millions of users immediately after you launch
4. Get rich from a huge exit i.e. get acquired by one of the tech giants (Google, Facebook, Microsoft etc.) or IPO

5 years ago, I probably thought that this was true. The thing is that if startup success were that easy, literally everyone would be a successful entrepreneur.

Of the 4 steps listed above, step 1 is usually the easiest. We have all been there; You are just there minding you own business when it hits you, many people have problem x that could be solved with application y, but application y either does not exist or you have never heard about it. If you could build application y, you would easily make a million dollars in the absolute worst case (at least that is what you think).

For starters, many people get so obsessed with their idea that they never actually make it to step 2. The people who actually arrive at step 2 are usually somewhat more interesting, because it takes a certain level of commitment to actually get there. The caveat is that many people who get to step 2 do one of the following (I have been very guilty of both in the past):

1. Build a product without doing adequate market validation to ensure that the need for the standalone product envisioned actually exists
2. Underestimate the effort it takes to get to step 3

“Overnight success” in the startup world is almost always preceded by years of constant failure and disappointment. Below I have highlighted a few obstacles that a number of successful entrepreneurs had to go through on the road to success. The goal is not to discourage hopeful entrepreneurs, rather it is to show entrepreneurs that “The Social Network” story is not necessarily the typical path to startup success and to encourage them to keep pushing and to be open to making pivots whenever they are required, because someday it might get better.

Brian Chesky, Joe Gebbia and Nathan Blecharczyk (Airbnb)

Brian Chesky, Joe Gebbia and Nathan Blecharczyk

1. Came up with the idea for Airbed & Breakfast in 2007
2. Launched Airbnb in 2008
3. Maxed out credit cards to to fund Airbnb after they could not successfully convince any investors to invest in the company
4. During the 2008 elections, they sold cheerios in custom “Obama O’s” and “Captain McCain” boxes in order to make the rent
5. Close to going out of business in 2009 due to low traction
6. Barely made it into Y Combinator in 2009, interview went badly and Chesky saved the day after he handed YC’s Paul Graham a box of “Obama O’s”
7. Had to start insuring hosts houses after ransacking and theft complaints began to surface
8. Airbnb raised its last round in 2013 at a $2.5 billion valuation

See the full story here

Niklas Hed, Jarno Väkeväinen, and Kim Dikert (Rovio)

1. Niklas, Jarno & Kim launched Rovio in 2003
2. Rovio team developed 51 lukewarm games between 2003 & 2009
3. Rovio neared bankruptcy in 2009
4. Rovio team built angry birds as a hobby projects while they were still trying to figure out how to keeps the company afloat.
5. Angry birds would eventually become Rovio’s saving grace, with 2 billion+ downloads as of January 2014

See the full story here

Elon Musk (Zip2, PayPal, Tesla, SpaceX, Solarcity)

Elon Musk

1. After selling PayPal to eBay for $1.5 billion in stock, Musk pumped a huge chunk of his PayPal fortune into launching private space exploration company, SpaceX
2. Musk blew hundreds of millions of dollars of his personal cash on the first three failed SpaceX rocket launches; He managed to scrape together enough money for the fourth flight which was successful. Had this fourth launch not been successful, Musk would not have been able to afford a fifth one
3. Tesla was raising a round of funding in 2008 when the financial crisis hit and the company nearly went bankrupt
4. The investment bank behind Solar City could not honor its financial agreement and future funding opportunities looked bleak
5. Today Tony Stark … sorry meant to type “Elon Musk” … is worth over $6 billion and SpaceX, Tesla and Solar City are each worth over a billion dollars

See pieces of the full story here, here and here

Evan Williams (Blogger, Twitter, Medium)

Evan Williams

1. Co-founded Pyra labs 1999 with Meg Hourihan and together they created a failed project management software. Pyra labs would eventually go on to build the blogging platform called Blogger
2. Blogger nearly went bankrupt after the tech bubble burst, and Hourihan and other key employees departed blogger, leaving Evan alone to man the fort.
3. Williams kept pushing to keep blogger alive and was fortunate enough to get acquired by Google in 2003 even though they only had hundreds of thousands of users
4. Williams founded Odeo in 2004 as a podcasting company and Apple released iTunes a few months after their launch, rendering Odeo irrelevant
5. One of the stars at Odeo, Jack Dorsey, came up with the idea for Twttr (would eventually become Twitter), a text messaging platform that let people broadcast text messages to many friends in 2006
6. Evan sent a letter to early Odeo investors in 2006, letting them know that Odeo was a bust and offering to buy them out of the company
7. Twitter only had a few thousand users till it began to blow up a year later @ SXSW
8. Twitter is valued at over $36 billion at the time of writing

See a piece of the full story here

Steve Jobs (Apple, NeXT Computers, Pixar)

Steve Jobs

1. Jobs spearheaded the development and launch of some of Apple’s biggest failures, including the Macintosh Office, the Lisa and Apple III. These failures triggered a series of unfortunate events that ultimately led to Jobs being fired from the company he founded
2. After he left Apple, Jobs founded NeXT computers. Although NeXT was eventually acquired for $429 million(probably partly to get Jobs back to Apple and partly to use the NeXTSTEP technology as a foundation to replace the dated Mac OS), it was generally a failure during its 11 year long run, with estimates of only 50,000 units shipped throughout its lifetime
3. Today Steve Jobs is remembered as one of the most successful entrepreneurs of our time, having built Apple into the most valuable company in the the world upon his return to the company

See the full story here

Max Lechvin (PayPal, Slide, Yelp)

Max Lechvin

1. Founded a string of failed/not-so-successful startups. SponsorNet New Media (ad banner network, ‘94-95), NetMomentum Software (white-label classifieds for newspaper sites ‘96), NetMeridian Software, (Made the company initials the same because he wanted to keep the logo from his previous startup, ‘97), ListBot/PositionAgent (acquired by LinkExchange, ‘98)
2. Worked on a side project called SecurePilot (one-time password emulator for PalmOS) which ultimately evolved into a product for secure storage for mobile devices (FieldLink), which in turn evolved into a secure wallet/IOU store (Confinity), which ultimately became a secure payment platform (PayPal).

Culled from Lechvin’s Quora post

Ben Silberman (Pinterest)

Ben Silberman

1. Along with co-founder Paul Sciarra, Silberman launched a mobile shopping app called Tote. Tote was unsuccessful, so the co-founders decided to pivot to Pinterest
2. Four months after launch, Pinterest had only 400 users. The first set of users were in Iowa and Utah, no one in Silicon Valley had heard about them
3. It took a year and a half to actually begin to break into the CA market
4. Most VCs passed on the deal because the founders were not technical and at the time they did not have access to top developers
5. Ben said that he was so obsessed with the small, but active community that he was building that he “wrote to the first 5,000-7,000 people that joined the site personally”
6. As of its last funding round, Pinterest’s valuation is $3.8 billion and it has over 70 million users

See the full story here, here and here

Tom Preston-Werner & Chris Wanstrath (Github)

Chris Wanstrath

1. Chris and Tom were working full-time on a startup called FamSpam (a google groups equivalent with an emphasis on photo sharing)
2. After they launched they did not get many signups and they did not really make any money. FamSpam was ultimately a failure
3. When they noticed that that their side project, Github, was organically gaining more traction that FamSpam was, they decided to focus on Github full-time
4. Github was bootstrapped until it raised its series A from Andreessen Horowitz in 2012 at a $750+ valuation

See the full story here

Phil Libin (Evernote)

Phil Libin

1. Evernote was his third startup, his first two had mediocre outcomes
2. Evernote had a very unconventional start, it came out of a merger that ultimately turned out to be a huge mistake because their ownership structure was hard for investors to understand
3. The 2008 financial crisis hit when they were about to close a funding round so investors backed out.
4. They had only 3 weeks of cash left in the bank and he had already made the decision to shut down Evernote and fire everyone when he received an email from a random angel investor in Sweden who eventually gave them enough money to push through
5. Evernote raised its last round in 2012 at a $1 billion valuation

See the full story here

Lawrence Ellison (Oracle)

Larry Ellison

1. In 1977, 8 years after he dropped out the the University of Illinois, Ellison partnered with with Bob Miner and Ed Oates to found Software Development Laboratories.
2. Ellison had to mortgage his house in order to obtain a line of credit to fund the business.
3. Oracle went a number of years with minimal success. When Ellison read IBM’s paper on the SQL query language, he saw boundless possibilities that IBM did not necessarily see, so he decided to rewrite SQL to be run on any computer. By the time IBM started releasing SQL supported products in 1981, Oracle was ready and the company boomed
4. Oracle made a lot of huge promises that it could not keep, such as making a claim that their software supported Digital
   Equipment Corp.’s VAX platform three years before it actually
   did, and this hurt its reputation
5. In 1990, Oracle version 6.0 shipped with so many bugs that clients could barely use it. Later that same year, the company reported its first ever loss and had to lay off hundreds of employees. The future didn’t look very bright
6. Ellison essentially brought the company back to his feet by rebuilding the entire management team and making some key acquisitions. Oracle turned a profit of $10 billion in 2013

See the full story here

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