
We Also Failed to Build a Billion Dollar Company - jim-greer
https://medium.com/@jimgreer/we-also-failed-to-build-a-billion-dollar-company-b7a2aab742cf
======
pnathan
These titles are interesting.

I have, myself, like pretty much everyone on this planet, never built a
billion dollar company.

As much fun as it might be to be that rich, it's never seemed to be more
realistic to think that than to think about being an astronaut. So the
interest to me is the metanarrative that's formed that says, _yes, this is
something achievable_.

~~~
jim-greer
It’s more realistic than becoming an astronaut, but not by much.

TechCrunch says there were 23 billion dollar exits in the first eight months
of 2018. Call it 35 per year.

That’s about as likely as being on a Superbowl-winning football team.

Young people often neglect realistic opportunities for success to chase
unrealistic dreams. As do entrepreneurs.

[https://techcrunch.com/2018/08/18/global-unicorn-exits-
hit-m...](https://techcrunch.com/2018/08/18/global-unicorn-exits-hit-multi-
year-high-in-2018/)

~~~
titanomachy
"It's more realistic [to create a billion-dollar company] than to become an
astronaut"

You're missing half of the equation. There are a relatively tiny number of
people (I assume mostly scientists and military pilots) who have set
themselves the goal of becoming an astronaut and are working towards it in a
concrete way.

In contrast, virtually everyone is trying to make money, and a huge number of
people create companies. Not everyone has "a billion dollars" as their
specific goal, but the implicit goal of "as much money as possible" is not
uncommon.

~~~
throwitaway6512
Having a goal of “as much money as possible“ is very different from the VC
fueled goal of Billion dollars or bust. Trying to draw parallels between
everyone who starts a company and the select few who aim specifically to
become astronauts is like comparing attempts at moonshot companies with
everyone who “wants to do something in stem”

~~~
pm90
If you think the majority of business owners don't want their businesses to
grow....you're in for a rude awakening.

The allure of technology in general and silicon valley in particular is the
amount of sheer wealth that you can create very quickly.

~~~
BoiledCabbage
And the point he's making is that "wanting your business to grow" has almost
absolutely nothing to do with wanting a billion dollar business.

It's like an athlete saying "I want to increase my endurance" vs "I want to be
am ultramarathoner".

The way you train, what you do, how you spend your time, how much time you
spend, the risks you take - entirely different worlds. Wanting a billion
dollar business is not remotely in the minds of 99%+ of business owners.

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azhenley
These articles are making me want to try to fail at building a billion dollar
company.

P.S. Kongregate gave me one of my first tastes of passive income. Thank you!

~~~
dmix
I'm guessing they have some sort of ad revenue sharing model? What type of
income did you make?

~~~
azhenley
They do ad revenue sharing and microtransactions.

I made 8 simple Flash games that generated a bit over 20k in ad revenue from
2009-2011 (very little came from Kong though). Anyone can download and host a
Flash game on their own site, which meant my games would spread to hundreds of
websites and I still get paid for the ads.

~~~
HNLurker2
Can you elaborate on the games and their processes (what was your magnus opus)

-15 year old kid from Romania who's childhood was flash games.

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jondubois
The last article I read on HN abput this subject, the author was complaining
about only achieving 20% growth per month and that it was a failure.

This seems like an extremely unnatural growth rate. It cannot possibly be
sustainable in the long run. I dont know what tricks they are expected to use
to achieve the ROIs but definitely, it's some kind of magic trick because this
is not natural. How can someone predictably and consistently grow by 20% per
month. Not possible. Why is it that the growth rate is almost always
correlated with the size of the investment. This is software, production cost
approaches 0 at scale, it makes no sense.

~~~
EpicEng
I saw the same and just assumed the author meant monthly growth targets to
reach 20% growth per year. Did they really mean 20% month over month? That's
insane.

~~~
wmf
Yes, the target growth rate taught by Y Combinator is 5-7% per week or 20-30%
per month (at such high rates it's better to track weekly because otherwise
you could fall too far behind before realizing it).
[http://www.paulgraham.com/growth.html](http://www.paulgraham.com/growth.html)

~~~
EpicEng
Wow, well... maybe it's just my ignorance, these people do this for a living.
Just seems like a crazy number to me. I'm sure there's a lot of detail and
reasoning behind that number.

~~~
wmf
Running a successful startup is crazy and unnatural; that's why it's so rare
and that's also why there's backlash against that becoming the default mode of
thinking.

Based on a quick calculation, to get from zero to one (billion) users takes
just under six years at 7%/week growth.

~~~
BoiledCabbage
The crazy part is people conflating starting up a business with trying to
build a billion dollar business.

Thinking anything not a grand slam is a strikeout is idotic and perverse
incentives.

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caseyf7
Fondly remembering the time “wasted” on Kongregate.....

~~~
dwd
I remember they hosted Desktop Tower Defense - that was an addictive game.

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rwallace
> The greater availability of capital has been good for founders, but as Tim
> points out, it’s been a mixed blessing for society.

The only way to suggest that even for a moment is to compare it with a
hypothetical state of affairs where capital is available from purely
altruistic sources. Compared to the actual alternative state of affairs
without the availability of capital - the lot of humanity for most of history
and geography - blessings that exist in the real universe don't _get_ any more
unmixed.

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xiphias2
I believe the solution is to be informed.

Most of the problems I read about here in HN from founders come from
information asymmetry: VCs have much more experience in negotiating. Still, I
can't pity the founders, as it's always the employees in startups that get the
worst deal. I was working only 1 year at a startup in my life as an employee,
and I got burned out after 1 year. Working at a big company is so much easier,
as it has the network effect already.

~~~
Mitchhhs
Its not always being just informed. Its the difference between knowledge and
wisdom. You may know all these things up front and make the same decision to
take VC because of other factors, prestige, the easy money, thinking you will
be the billion dollar company. Then things don't go as planned, the rubber
meets the road, and the cool sound of telling people you raised VC wears off.
Then you realize why all of these articles are written and write one yourself.

~~~
xiphias2
I see. It's just so easy to get to a few million dollars of wealth over time
if somebody's good enough to get to a big company and invest with a healthy
diversification.

I really don't understand why people are risking that to be a billionaire with
a small probability, when the difference in the lifestyle that that money
allows is probably not that big.

I'm sure it's cool to be a billionaire for some time, but also it probably
wears out quite fast when you get back to work.

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goldcd
Reading the story and the links, made me think. We have VC chucking in massive
money and expecting billions in return and failing that dish out a swift
euthanasia to the vast the majority within the cohort that didn't do well
enough. Then Growth-stage funders, who seem to have more conservative
investment/expected returns - but still "high expectations" compared to a
regular old business or an interest rate. My personal knowledge comes from the
other end, "guy with some cash started a company, knew some people with some
spare cash, built it and sold it into an existing corporate and exited" He
became guy with a bit of spare cash, who moved one up the totem pole with his
next company. From both ends, it all seems a bit "jerky" and inefficient -
potentially profitable companies fail as they either don't match the
ridiculously high goals set for them - or don't have enough cash reserves to
get them over a small blip in monthly revenue. Maybe more importantly, as a
startup your employees care about this - as you've tied their income/job to
the prospects of the company. Therefore that "next round of funding"
determines whether anybody turns up on Monday. Now if your company IPOs this
all becomes much simpler - keep the shareholders happy, grant employees
options - the vast pool of money you're swimming in smooths out the bumps - or
at least makes the rules clearer. There are rules, motivations and just
generally "things" that happens "pre-IPO" and stuff that happens "post" \- and
they are very different. Different from a financial perspective - but from a
company perspective it's just people going to work, making something
interesting, and wanting money..

~~~
goldcd
My point is that many companies are 'profitable' in a financial absolute sense
- but not up to the expectation of the non-market owners. If we had a better
system (similar to post-float IPO) before IPO to handle this and allow people
outside of funding-rounds to invest/sell - I can't see how this wouldn't
benefit us all.

------
coderintherye
Very interesting. Your byline on Medium says "I have a games site called
Kongregate". Are you still involved with the company? Is Emily still involved?
If so what led you leave and her to stay? What got you to leave EA to start
Kongregate?

~~~
jim-greer
Whoops, I'm not there anymore. Emily is still CEO. The focus has shifted from
being a web games platform to a mobile games publisher. I'm much more of a
platform person so it made sense to transition it. She's doing a great job -
they've published a lot of great games and are helping indies succeed in the
age of of "games as a service."

Before I was at EA, I started a game studio in the CD-ROM era. We published an
RTS-puzzle hybrid game through Activision, which was a critical success but a
commercial failure. Because of the distribution and funding model then,
Activision owned the copyright. That meant that we couldn't make a sequel to
correct the things we'd screwed up the first time around.

When we started Kongregate in 2006, internet distribution was there, but it
was very hard to make money. There were no smartphones and Steam only
distributed Valve games.

The goal of Kongregate was to fix that. We contributed to the change, though
smartphones, Steam, and digital distribution on consoles were the big drivers
of course.

~~~
forkLding
Is there a blog post on Kongregate's founding? Kongregate was my childhood and
I've often wondered about the history. Much thanks for this post too.

~~~
jim-greer
Unfortunately no.

Edit: Emily gave a talk on it at the IGDA Summit, but unfortunately it's only
available to members.

