My $0->$100M->$0 in 5 years story

Lessons learned from that post:<p>(1) &quot;I was told to hire a lot of people. Put fuel on the fire they said. Bring industry experts who can move the needle. All this BS you hear all day. All failed. I hired VPs and bloated my payroll. Ultimately I ended up with a bunch of highly paid employees who don’t know how to do anything but to “build and lead amazing teams.” Imagine you hire someone to scale an area and their solution is to divide that area into 5 sub areas and hire someone for each of them to figure it out, etc. that’s their solution.&quot;<p>(2) &quot;I ended up focusing my efforts on hiring and ramping up those VPs and dealing with their dumb ideas instead of focusing on my 3 core tenants: build, sell, and deliver.&quot;

&gt; Ultimately I ended up with a bunch of highly paid employees who don’t know how to do anything but to “build and lead amazing teams.”<p>I&#x27;ve worked at a lot of startups. The worst of them were led by people who list things like &quot;organization design&quot; and &quot;build and lead amazing teams&quot; on their LinkedIn.<p>At the most dysfunctional company, the ex-FAANG CTO would take key job descriptions and add the requirement that they must have FAANG experience. This created a glass ceiling where the early employees, non of whom had FAANG backgrounds, were unable to be promoted. Instead, we got a lot of ex-FAANG VPs and Directors who didn&#x27;t know how to function at a startup. They were told to lead teams of people who knew the business inside and out (because they built it!) yet they could barely function outside of a big company themselves. Every meeting would be a competition of stories about &quot;At Microsoft we did this...&quot; or &quot;At Facebook we did that...&quot; because playing the FAANG card was the only thing the CTO liked to hear.<p>The only non-FAANG person who thrived at that company was the single worst leader I&#x27;ve ever reported to. He is a LinkedIn influencer with his own newsletter where he talks about, among other things, his expertise in &quot;Organizational Design&quot;. Yet the organization he designed was completely dysfunctional because he ignored how the business worked and instead hired arbitrary numbers of people according to some book he read. Half of the people at that company were 90% idle, while the other half were working 80 hour weeks because the &quot;organizational design&quot; person had strictly assigned responsibilities to arbitrary teams in a way that didn&#x27;t account for how the business actually worked.<p>The next line from this post is exactly how he responded to every problem:<p>&gt; Imagine you hire someone to scale an area and their solution is to divide that area into 5 sub areas and hire someone for each of them to figure it out, etc. that’s their solution.<p>He was never accountable for anything because he always had someone under him to blame.

I’m a VC backed founder. The VCs will give you lots of advice, but generally are removed enough from the business that it’s obviously up to you to make final strategic decisions.<p>This story is remarkable in one sense: the founder removes all of his own agency from the story. The vast majority of initial financing rounds leave the founders in control of companies these days…<p>Finally, a VC backed company is always likely to die. If you want to run a nice, small SaaS, don’t take VC. Whether financing comes from a bank loan, an angel, private equity or VC, one job of entrepreneurs is to align incentives with capital sources.

All I&#x27;m thinking is, you Americans are really fucking lucky. Yeah OK, VCs are greedy and difficult to work with, but at least they give you a chance and literally give you startup capital in the millions to build your own thing. That is mind blowing to me and definitely what sets America apart from everywhere else.

Elements of this story indicate a founder who simply lost control of their company, which is their job as a founder. I don’t think the VC is the villain here.<p>They raised at an inflated valuation and seemingly received a favorable multiple (100-10x “7-figure” revenue). The fact that they rode out the company to 0 means they had board control and were never fired. So they are ultimately responsible for every decision they made. Including over-hiring and not firing their clueless VPs.<p>I say this as a founder of a yc-backed company that was acquired. I know the pressures of short-sided VCs. I also know that the job of a founder is to pick which advice you follow.

I can condense this to &#x27;I thought CEO was a nice title but I failed at taking it seriously and allowed others to lead my company whilst I held the title&#x27;.<p>The results are predictable. Note how there is no acceptance of personal responsibility.<p>I also note that there isn&#x27;t a shred of evidence for this whole story, and $100M to $0 does not seem like a believable trajectory (nor does $0 to $100M, but the other is much less believable).

This sounds like the start up I left a couple years ago. I was employee number 3. I took a deep pay cut to join them. I shared a cubicle with the ceo and cto, the two cofounders. Tight nit group.<p>A year later, we had our first round of vc fund. I had a slight bump in salary, but owned stocks so all is good. My role was, make-things-work-at-all-cost. I&#x27;d be on calls with customers and their engineers to make things work. I&#x27;d generate specialized reports by merging data locally, I&#x27;d get a calls on my personal phone from customers. We did the things that don&#x27;t scale.<p>Year 2, we are 30 employees getting ready for another round of funding, the ceo and cto spent all their time in vc meetings. I worked in all my waking hours, it was unsustainable. I told them I needed a break, the way they responded showed me that I was just another replaceable employee.<p>I packed my stuff and left, they tried to screw with my stocks, but i fought back and got it all. They got their second funding. They never replaced me. Instead of hiring 2 or 3 people to do my job in a scalable manner, they stopped offering the service all together. Instead they went with buzzwords in AI.<p>Fast forward 3 years. The company was acquired, the stocks are worth 0 dollars, and most employees got fired. Though the linkedin post sounds like a success story.

1) How can you be in an &quot;executive job at a FAANG&quot; and not know this is how the VC model works?<p>2) &gt; I hope this part is clear because it’s the crux of the misalignment between founders and VCs.<p>This is the crux of the misalignment between <i>small business owners</i> and VCs. The large majority of the <i>startup founders</i> I&#x27;ve met all have dreams of building a rocket ship, not of building a happy small business. If you&#x27;re in the latter camp, as I have been several times, you usually know better than to take VC money.

Here&#x27;s the real story:<p>This is someone in their teenage to twenties, who makes 10 reddit accounts a month, farms karma on them, then sells them to spammers in a couple months for a couple hundred dollars each.

What I got out of the post is – &quot;My business was on a path to success because of my own efforts, and failed only because of those pesky VCs and their money&quot;. With an attitude like that no wonder they lost what they had.

Honest question: if you sell &lt;50% of your company to VCs or anyone else and your articles of incorporation state that you can do whatever you want if you own &gt;50%, then why do what the VCs tell you to do?<p>Beyond gaining some sort of reputation for not doing what your investors want, is there anything else?

There’s a lot of information missing. All of his problems were caused by VC? Why did he raise VC if he had 7 figure revenue? 5 years explained in 6 paragraphs. I agree that hiring bigco people for a startup is a mistake, but otherwise you can’t learn anything here.

It was making 7 figures and now it&#x27;s worth $0? If the investments from VC didn&#x27;t lead to anything, wouldn&#x27;t the company still make 7 figures anyway and shouldn&#x27;t it be possible to continue as it is?

This post looks like a LARPer.

A little frustrated by the ambiguity of the $100M in the post. Is that capital raised, ARR, GMV? Makes a big difference in terms of understanding what kind of business they built.

&gt; Imagine you hire someone to scale an area and their solution is to divide that area into 5 sub areas and hire someone for each of them to figure it out, etc. that’s their solution.<p>FANNG hires?

At the point right before taking VC money, what&#x27;s the safer alternative sources for cash? This is a serious question. The alternative I&#x27;ve seen work is another company in the same field make the investment with an option to further invest or acquire the company later on. Their expectations for growth were a lot more &quot;down to earth&quot;.

I would have preferred to see this written as a blog post, there&#x27;s nothing that requires anonymity imo if presented the right way, and it would make it more credible. As is it&#x27;s believable and certainly reinforces stereotypes I have but it&#x27;s not super helpful, as in it&#x27;s just an outline of stuff people already think.

Tangential question: how hard it is to &quot;buy back&quot; the company shares from venture capital firms?<p>I&#x27;ve heard these &quot;grow until you burst&quot; stories some times, but no one ever told a good way of getting free from the VC without retaliation

TL;DR: Founder had healthy startup, accepts VC money, acts surprised when VC wants rapid growth and returns.<p>Who could have predicted this?

Go with proven people. Whoever is already proven to meet your requirements, use them. Grow slowly, but steadily.

“…and now I bootstrap!”<p>because you paid yourself $300k for 5 years despite having such low performance

A riddle: how do you know that an anonymous Reddit post is exaggerated?

Are all VCs like this or did OP strike out with some bad apples?

At least your numbers are positive, doing much better than me.

&gt;All in all we went from $0 to $100m to $0 because I followed the advice of the VCs.<p>It&#x27;s not the VCs&#x27; fault that OP failed at scaling his business. If you are getting VC funding you will need to be able to scale up.

Many such cases

“FAANG exec” … today in middle managers learn real business is hard …