Startup Story: A Cautionary Tale

Posted 4 years ago

This is a work of fiction. Names, characters, places and incidents either are products of the author’s imagination or are used fictitiously. Any resemblance to actual events or locales or persons, living or dead, is entirely coincidental.

There's nothing new on the internet, there never is. You get tired of wasting time and go back to working on your prototype, SocialBox. It's your newest project, a social memory box, and it is starting to get some attention from your friends. You've really enjoyed building it, and like every project, you've learned a lot along the way. "Carol has added 5 new photos", the notification pops-up on your screen. You click around the site with delight, reveling in all the glorious details, the sleek design, and the clean code. You know it's late, you have work tomorrow, but you stay up for a couple of hours chatting with friends, listening to music, and doing bug fixes for SocialBox.

You're groggy the next morning, and the routine stop at the coffee shop is quite essential. It seems to be a typical day, sitting in your cube, refreshing Reddit for the 500th time, chatting with friends about your latest project, all the while reading r/startups, Hacker News and TechCrunch. Your boss walks past your cube and you quickly switch to Emacs, your IDE of choice. Noah sees you tapping away in Emacs and makes some quip about how Eclipse is much better. You yell at him about macros and return to your slacking. 

You get an email. It's from Chris Dixon and he is interested in SocialBox. Interested to the tune of a possible 100k angel investment. It's the last thing you ever expected to happen. You notice he is responding to an email you wrote, and then it rushes back to you. A couple of weeks ago you and Noah were sitting around drinking beers and talking shop. After some talk about your prototype, he convinced you to email some angel investors. You kept trying to explain what a waste of time that is, but he persisted. So just to shut him up, you emailed a handful of people. Chris invites you to meet him at The Standard.

You and Noah go out for drinks after work, where you tell him the news. His face shows a mix of excitement, jealousy, and disbelief. Later that night you see your girlfriend Carol. She is very happy for you, and tells you all your hard work is finally paying off. You can't sleep that night, all you can think about is what the future holds. 

The next day you meet Chris. He loves your idea, and has some ideas of his own for SocialBox. You can tell he is summing you up, while trying to remain open to what you have to offer. You discuss potential business models for SocialBox, and happily find that you both have the same thing in mind. He asks you to implement the features needed to monetize, and also invites you to a small gathering of founders/investors later that night. 

You ascend the steps of the Upper West Side brownstone and ring the buzzer. The door clicks open and you walk in to a fully wood furnished interior. A crudely drawn sign and balloon points you to the second floor, As you climb the wooden stairs and grip the oak banister, you can hear a mixture of conversation and laughter. That night you meet two other angel investors, and in the coming weeks you quit your job, and raise $240k to work on SocialBox full time. 

You make two hires, Dylan, a senior engineer, and Isis, a highly technical 'sales engineer'. Together you start implementing the business model, which is charging users who have over 5gb in their memory box. Dylan takes over most of the coding, while you start spending more time building marketing campaigns and working on sales strategy. Isis ensnares critical success with a small interactive marketing page he built. He posts it to the usual social media channels. When the results appear positive, you approve a budget of $10k on advertising the page. The site starts to blow up. 

You need to scale. Along with Isis and Dylan, you come up with a pretty decent growth plan. You need to hire more people and get better hardware. You speak with Chris and the other investors, and together you all agree that you need to raise more money. 

After a grueling 5 month slog, you raise 2.5 million led by Union Square Ventures. You had your eye on Fred Wilson from the beginning, even before you ever raised a single dollar, and you had always dreamed of the day USV would invest in something of yours. You add several new smiling faces to the team. You get a new office with a beer fridge and a billiards table. You throw a launch party for SocialBox. A couple of your friends come, but it is mostly founders and investors, along with some press. People get super wasted. You find yourself back at the office, just you and the cutest intern. You make out on the billiards table, and then take her over your desk. You wake up the next morning hung over but on top of the world. You have thousands of mentions on Twitter. You have a 100 emails pointing you to a TechCrunch article about SocialBox. There, on the front page of TechCrunch, is your picture, smiling and bright. In that moment, you are the darling of the startup community.

After a few months, the growth starts to recede. It's the first time you have a contentious board meeting. The board was expecting the growth to continue in a more upward direction, so were you. You come up with a plan to make a few key senior hires. You focus on senior marketing and sales leadership. While you are doing this, you cannot help but notice the 50 other copycats that have sprung up around you, all over the world. Some of them have closed an A round, but your advisors and friends insist you ignore the competition.

You've been running in the red for 8 months now. You are still showing revenue, but you cannot get in the black, there are just too many people on staff. You have made extensive cuts to the sales team, but you know it wasn't enough. Marketing and IT costs are starting to grow rapidly as well. For a while they seemed almost negligible, which made them easy to ignore. But lately they seem to be a big piece of the pie. The board keeps pressuring you about your burn rate, and as it stands you have 4 months of runway left. You talk about raising a B round but the board seems doubtful. "Your metrics are not showing the correct direction to inspire a B round," Fred says, as you walk out of the USV office.

Instead of going home, you head over to Carol's apartment. You lay down on her couch and put your head on her lap. She strokes your hair, and you exhale deeply. You tell her about the pressure from the board, the anxiety from the cuts you just made, the worry that you can't scale the product as you originally anticipated. You tell her of the days you dreamed of simply having an office with a few employees working on something cool. How happy you were to raise the angel round, back when you first met Chris. You reminisce, laying across her couch, your head resting comfortably on her lap. She just looks at the wall in front of her. You already know what she isn't telling you. She is getting tired of your late nights, not answering her calls, not being around. You exhale again.

"Maybe we should break up," she says. 

You close the door behind you and head towards the subway. All you can think about is all the people that would lose their jobs if your company got shut down. And then you think about all the other founders who are now your friends. What would they think? You bargain with yourself that perhaps they have the same problems. But it makes no difference. You fear you are not on the trajectory you dreamed of. No one was going to make a movie about your startup.

At the next board meeting, nothing is left off the table. They start with a conversation about firing you. It is raised in jest, but you can sense the dark undertones. You assure the board that you feel confident about the company, and that you and your senior team are working on reducing costs and ramping up engagement. They ask about the 40% drop in user growth, and you offer a weak explanation about a bug on the sign-up page. They ask about the 4x drop in revenue, and you suggest that the market is getting swamped by competitors and eating into your share of the revenue. You feel like a 500 watt lamp is being shined on you. The heat of a thousand suns is burning you from within, and you are starting to sweat.

You head to Lillie's, a bar near the USV office. You order a double Bulleit on the rocks and sit at the bar staring at your phone. There are hundreds of unread emails in your inbox. You click on Carol's Facebook page and sigh while you investigate her timeline. You go through your phone and see who you can text. You text a few old friends. You don't expect anyone to respond. You order another double Bulleit, you're feeling very thirsty. Your phone buzzes, it's Noah. "How's it going? Congrats on everything with SocialBox man!"

You sigh. You start bantering with him over text. He's your only conversation partner, and to your drunk mind he seems like a voice from the void, a divine confessional. You tell him you are feeling overwhelmed. That there is no success for you. The bar is too high now, and everyone around you is making millions while you have a measly failing company and half a million left in the bank. You tell him that you are concerned about making $1800/month rent, and you know people who have million dollar lofts, that you might get fired from the very company you started. "I kind of miss the days when SocialBox was just a side project…" you text. He doesn't respond for a while, then encourages you to turn it around. He offers his help. You text back "If only I could gtfo of all this." The next morning you wake up regretting what you confessed to the divine voice in the void.

Then, another email. This one is from Amin Zoufonoun, head of corporate development at Facebook. A month ago, after making massive cuts to your team, you re-engaged talks with Facebook. They are one of the few companies you have talked to about selling SocialBox. Previous talks with them had gone flat, and you shifted focus to raising money. But now they are back, and they are asking for a new price from you, they are ready to put a term sheet together. You are desperate.

When the acquisition goes through, and the news hits the press, there is a celebration with the remaining staff. You are welcomed with open arms into Facebook, and your team seems overjoyed. Inside, you feel it is a pyrrhic victory, but you cannot share that emotion with anyone. The deal is almost all stock, and the cash being put down is going straight to the investors. The team is excited about the acquisition, and you know this means they will get to keep their jobs, and they may even get some stock. You were also given stock, 10,000 shares, currently valued around 250k. They come with a 5 year vesting period. Your very own personal golden handcuffs. You and your remaining team celebrate. But you cannot help but remember all the struggles and hardships along the way. Working morning day and night for something you once believed in. Something that, today, you can't even smile about.

Once at Facebook, you are quickly crushed under the bureaucratic, process-based management structure. You find that most everyone around you is there by acquisition, and you realize many teams have already laid stake in big products. You struggle to find your teams niche, all the while struggling with your stock units. Everyday you watch the FB stock price, and constantly figure out how much your stock is worth. You keep asking yourself if the 5 year vest is too long, then you consider how much 20% is worth. You tell yourself you will leave after one year.

The founders and investors you used to hang out with have stopped calling. Facebook is about to kill off your company's product line. Everything about your brand, your company, your struggle and your creation is coming to an end. The friends you had made are gone, the friends you used to have moved on, and you are left wondering what is next for you. You try to go back to the drawing board but you can't convince yourself to get motivated again. You have a strong network, much stronger than before. But without an idea, traction and revenue, your network isn't that interested.

After 2 years of Facebook you cash out 40% of the shares, worth $128,000. You quit with nothing ahead of you except a one month vacation to Hawaii. While on vacation you hear a story about a fish. The fish would always grow to fill most of the space it was in. If you moved the fish to a bigger pond, it would keep growing. No matter how big the pond, the fish would always grow to fill most of the space. Because of this, the fish was never happy where he was, he always demanded more. After a while there was no more space left for the fish, no pond or lake could contain him. He was told that if he moved back to a smaller pond he would shrink back down to a normal size. He stubbornly refused to be smaller than any other fish, and due to his unhappiness, he ended his own life.

That night you lay on the beach, listening to the waves crash against the earth. You think about when it all started. The excitement you felt when that first email from Chris Dixon hit your inbox. The emotional roller coaster of raising the series A. The first paying customer. The ensuing fear, the loneliness. The celebrations. The excitement, the anticipation for growth. Back when all the possibilities of the world were in front of you, and you were ready to be king, master of the domain, emperor of the startup. You stare up at the night sky and for the first time in years and notice all the stars. They make you feel small. You think of Carl Sagan's pale blue dot. How earth is home for "everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives." It reminds you of how small you are. No matter how hard you try you will never take up all the space on earth, you will never outgrow anyone else. Work should be done, whenever possible, for the pursuit of love. You remember the happiness you had with Carol, and beers after work, and programming SocialBox just for fun.  It is all gone now, and you don't know when you will find it again. But you feel ok with that. You feel ok for once, not knowing, not wanting.

About the author

Dev/Code/Hack is a technology and business blog by me, Par Trivedi. I'm a software engineer and I've been writing code and managing teams for over a decade. This blog serves as a way to share thoughts and ideas about the tech/startup community, and also to educate newcomers to software development.

4 Comments

  • This is one of the rare inspiring stories I've actually read ever since!

    Michaels 1 year ago   Reply

  • Love this story!

    eneve 4 years ago   Reply