I don't understand why he quit just when he started to get a bit of traction. He got past his first lawsuit (it appears, and most employees of a company aren't aware of how much legal and sometimes government friction their is involved in running a going concern), he started to discover how important a D&B number (or a proxy thereof) is for customers who buy from him on credit, he overcame some serious product quality issues, and began to understand that running a business is hard, hard, hard work. The story had just _started_.
And then, he quits.
Now is the time that he needed to start networking with other manufacturers (or wholesalers, or retailers, or product designers - or whatever he wanted to be) and understand how to improve his product design, his sales channels, etc...
It sounds like he limited his distribution to less than a hundred organizations. Certainly less than a thousand. The type of product he had _required_ knocking on tens of thousands of doors, calling, emailing, mailing, and reaching out to people who could distribute it.
I don't see where he hired his first employee, that would start to take over some of that manual labor, marketing, calling, packaging, delivery, etc...
I didn't get a chance to read about the technical improvements that he made in shipping, or even any of the passion that he had for selling. I realize this was a "All startups fail for different reasons" + "An MBA doesn't mean you will be successful in a startup" type article, but reading between the lines, I wonder if there was an even better, "I didn't really fit the Startup Character" article - despite some initial victories.
Compare that to an entrepreneur who is passionate like Joel Spolsky - even on a completely trivial side project that I suspect is mostly part of his recruiting efforts for FogCreek he keeps blocking and tackling and overcoming obstacles (check out http://www.joelonsoftware.com/oldnews/pages/December2005.htm... for the summary of one)
Anyways, I do enjoy reading "How my startup failed" stories as much as "How my startup succeeded" - but I don't sense that his startup failed. He just quit.
Why commit to a specific product? Why not just by up a few boxes of different funnies & see which sells? Condom keychains are funny but hardly revolutionary. It's not going to be a product that sells it self, hires its own consultants & negotiates with Wal Mart while you sip Tequilas. What he did was establish a wholesaling business with only one product, where he had to pay cash & sell on credit.
Not knocking the effort, but designing/sourcing/manufacturing apples is not the same as selling apples. No reason to do both. Aren't you better off selling apples & pears & not bothering with growing at all?