I had a 3:00AM conversation with Steve Jobs (long story) about something I was trying to do with Apple. This led to being invited to meet with an engineering and marketing team in Cupertino.
Without saying a thing, a few days after our meeting Apple added a link to our website from the first page of one of their main product pages.
Traffic instantly went from a few thousand hits per day to hundreds of thousands per day. It didn’t let-up for perhaps a year.
We were not prepared for this at all. It was a mad scramble to shift, pivot, adapt, evolve and attempt to rise up to the opportunity provided by this unexpected move.
I don’t think I slept for a whole year.
This was before iPhone times. Apple, among other things, was focusing on the applications of its product in the media-related industries. I launched a self-funded startup to develop hardware (FPGA, embedded, real-time image processing, software) for this industry segment. After a year of very hard work I was able to emerge out of the garage with a fairly sophisticated product that was very well received.
Only one problem: The product could work much better if Apple would only modify their newly-introduced Apple HD Cinema Display. I had already hacked the display and developed the modifications, I just needed Apple on board. I tried in vain to make contact with a number of people at Apple. I was getting nowhere.
My work schedule was nuts, pretty much 18 hour days, 7 days a week. That's what you do when you are launching a business, particularly if you put it all on the line and have no outside funding or support. Which means it was normal for me to be in the garage up to 3 or 4 in the morning coding, designing hardware, or just generally working on the product or business.
One morning, out of frustration, I decided to hunt down Steve's email address and send him a note. I found a plausible candidate and sent an email at 2:30 in the morning. I still remember the subject line: "Trouble doing business with Apple". That was followed by just a sentence or two which, frankly, I can't remember. Not much in the way of details. Clicked "Send" and went back to coding.
Around 3:00AM I get a short email back:
"What's the problem? -Steve"
I sat there staring at that email for some time. I finally decided that this was either someone having fun at my expense or the real guy. No harm in trying. I typed-up a couple-page response with as much detail as made sense and sent it.
I got a reply within thirty minutes or so. A couple of questions, which I answered.
The conversation ended with another short email:
"Thanks for reaching out. -Steve".
It's was 4:30 AM or so. No point sleeping. I couldn't.
Later that afternoon I got a call from a VP just below Steve. He said "Steve asked me to take care of this for him". We spoke for about 45 minutes. The following day he invited me to come out to Cupertino, meet with their engineering team, explain how to fix the problem and discuss a few other non-engineering items.
Fast forward to a few months later, I designed an iteration of our product per Apple's request and we launched it at the Apple booth during one of the industry events. Pretty crazy ride. Like I said in my prior post, I don't think I slept in a year.
Too often have I come in the next day and deleted all but four lines of what I was tying the day before. Sunk cost fallacy hits me less severely after I’ve “slept on it”. Maybe all those grandads were right.
I equate it to sailing in stormy weather, something I've done a bunch of times. It is important to know the general direction you need to go and establish a few goals, yet is it foolish to think you are actually in control. The ocean tells you what to do from wave to wave and you work hard to do as it desires while constantly pushing towards your desired outcome. It's an art, a science and, yes, a bit of luck never hurts.
That's the challenge of entrepreneurship. You can either let the ocean, the business, sink you by taking you off-course and causing you to make bad decisions and face dangerous circumstances or you can navigate what it puts in front of you every day as best as you might be able while also pushing hard to generally point in the direction you want to go.
Sure, there are cases where people get on that boat and the thing just pushes forward with favorable winds and it's go-go-go (Facebook comes to mind). Yet that's not what a typical business looks like. Most businesses are like the aforementioned storm. Which is to say: Hard work, uncertainty, fear, joy, trepidation, doubt, bad decisions, good decisions, bad luck, good luck and, maybe, if things align, a good outcome on the other side of the storm.
This is why I think --conjecture on my part-- groups like YC have found that multi-founder teams consisting of young people without prior business experience do better than single founders with the same life experience.
Anyone can operate when the weather is great and winds blow in the desired direction. Yet that's not reality. You are going to tear a sail or break a mast here and there. In these situations the right team can be much better than a solo founder, even if they lack life and business experience.
My best advice is to not use the past as a source of regret but rather as a source of wisdom. Failures hurt (I've had a few, I've been bankrupt, penny-less) but they are also absolutely invaluable if one is able to remove emotion and learn from them.
At the moment I am in the process of starting yet another company, this time in the vertical farming space. I can say, without a shadow of a doubt, that my failures in life and business have helped me and will help me along this new journey far more than the success I have enjoyed.
Don't dwell in the past, use it to make you a better entrepreneur in your next adventure. Make something that solves a real problem and give it all you got. If you are willing to navigate the storm the market will reward you for it.
...unless you left it out for a reason
Why is this short opportunity window unique? So you realized you missed this window but then the environment was already one where this "5x" demand no longer existed? If that's the case would it have been wise to ramp up that quickly? Maybe you did the right thing.
Where you’re correct is that people look at this in hindsight and say things like what I said. But in the moment they may think this is the big chance, hire a few staff to build them faster and get stuck with a bunch if liabilities when demand ramps down while they were hoping it would continue going up.
People who don’t believe in their business fail, some never even start. But believing your own hype is the best way to fail spectacularly and I expect it’s hard to see while it’s happening. Even as an employee I’ve looked back a few times and wondered what the hell I was thinking buying into a failed idea.
I’ve been on both ends of the stick and can honestly say it sucks to give advice that didn’t work out for someone, or receive it.
PG also says to aim initially for Ramen profitablity (cover your rent and food bills) and then stay there till you figure a way to grow exponentially. Which is what OP did.
It's a lot easier to hold a regular job than it is to take a business from idea to execution... as you well know!
> I was building servers one at a time, using the money from the first to pay for the next one.
Is that they were financing the purchase of each new server with the money that they got paid by their customers. So they had to wait a certain amount of time until they had enough money to build each new server. If instead they had bought multiple servers at once, on credit, they could have started serving more customers much faster.
I mean, there certainly was also a time aspect that was independent of that serialization, but a lot of that was also saving money. I mean, I personally argue that buying servers from parts is less time than negotiating a good deal on an assembled server, but we certainly could have gotten tested servers out faster if we were willing to shovel more money at someone. Maybe even if we still serialized the purchase.
If you were selling/leasing compute commodities you were probably more of a logistics company vs tech.
I don't think that they are mutually exclusive. Some products take a long time to get organic growth and some products have a narrow window where they could blow up.
Perhaps you should remind yourself that plenty of people in your age group have salaries that are less than 1/4 of a silicon valley salary, and they think it is normal.
Not if you're reflecting on how you spent the last 10 years.
Thank you!
One of the worst parts, though, was that I felt like getting my first job after working on my own company for a while was... much harder than it has ever been for me to get a job. Like getting a job after being unemployed for a long time, which felt like a huge insult after how hard I worked.
I personally think it's actually a much bigger risk to do this when you are young (I mean, if you otherwise have the opportunity, like I did, to work a corporate job that let you max a 401K) than when you are older, once you have maxed that 401K as a younger person.
I haaaate working for anyone else after tasting success, but my FAANG salary and 401k and stock options simply can’t match the 100 cold calls a day startup life
If you have a growing business making money it should be fairly straightforward to get a loan under your business name.
this is not my experience, not without a personal guarantee or collateral that holds it's value better than servers.
(Leasing servers was also an option that would have made sense then. Most of the leasing deals I was offered that didn't include personal guarantees were two year leases wherein I paid about as much as the servers would cost up front over two years. It would have made sense in that case, but it's super expensive compared to buying servers)
I've been down this road. I did not answer this question properly. Doesn't matter how much you believe in yourself, if the bank wants a personal guarantee, they dont really believe in your vision.
My best advice 3 year post blow up. It ain't worth it. Move on. You will save yourself pain.
My own personal view, if I could go back in time, would be to tell myself to go all in. I think it had a shot, and I needed to take that shot. I still think risking a bankruptcy to get a better chance at that would have been worth it.
I don't regret trying. I needed to try. And I think it was a near-run thing. I could have made it. I feel like there are several points here where if i zigged instead of zagging, I'd have done really well.
I just regret that I spent so long at it, without much success. A spectacular flameout involving business and personal bankruptcy after three or five years would have been far better for my long-term financial health than just slogging along at 1/4 wages for a decade.
If you are just trying to make ends meet, then yes, probably don’t go for it.
If you need access to working capital to hire more people, increase production, etc then it’s completely worth it.
For reference I founded a consulting company. We landed large projects. Had to pay employees to produce the deliverables, but did not get paid until later.
Basic math here is: Typically Net 30 terms. Usually have to pay a month or so worth of salary before hitting milestone to allow billing (then 30 more days to get paid). With $80k/mo in salaries we required working capital.
Even at the criminal levels that are charged for startup loans (plus personal guarantee) it is worth it when you are making 60%+ margins.
I have since paid down the loan and then sold the consulting side to focus on some products with a small in-house team. Funded for years at this point.
Plus once you’re in profit, your loan frees up capital for growth.
Don’t act like bankruptcy is bad, it’s a valid pathway and you should by all means use it instead of sitting in a hole for 5 years or more. But learn from it, don’t be that person filing chapter 7s every 7 years
That's a tale told by everyone who read books about business or took some MBA classes.
It is not the case.
You can only be guaranteed to get a loan that is collateralize by FCF. FCF loans are stupid because you pay interest on a loan that is given to you in the amount of FCF. If you already have FCF, the only reason to get that loan is to build a business credit history by, quite literally, paying for it. That credit history is irrelevant for next 5-10 years because conventional financial vehicles do not care about your credit history until it is about 10 years long.
That's why VCing is the thing. If you are small, you have growth and you have FCF, your rapid path forward is with VCs, not conventional loans
It feels a lot like 2005 all over again, easy credit that will wash up at the first hint of economic downturn (I had cards reduce their limits in 07 just because)
One of the clearest mistakes I made that could have made the company opportunity cost profitable had I not screwed it up was that I was conserving capital while I had the opportunity to grow really fast. For a short period of time, because of a blog post someone else wrote, I had a huge waiting list. I was building servers one at a time, using the money from the first to pay for the next one. A lot of that waiting list dried up while they were waiting for me; There is a reasonable chance I would have been 5x bigger at that point had I maxed out my credit and bought servers all at once. And if I was wrong? if I maxed out my credit and went bankrupt? I'd still be better off than I was in reality.
10 years at 1/4 salary is... brutal in a way that bankruptcy isn't. (I think. I've never actually gone bankrupt.)
I guess my real point here is that you need to time box it. At some point, you need to give up. I've never worked with VC, but I would assume that it would act as something of a forcing function here. I think being disciplined about "always take a better job if you are offered one" might also work.