How Andrew Wilkinson lost $10,000,000
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https://world.hey.com/dhh/it-s-hard-to-draw-lessons-from-your-own-failures-d4608094 - a better formatted reaction to this
Yeah, DHH's response hits my main reaction pretty strongly:
At $3M ARR, they should have been pocketing more than $1M/year if they had a "small" dev team of 10 or so developers. At $900K ARR, they should still be able to trim back that team and be able to pocket $300K/year at least.
DHH has some great points about why Wilkinson ended up in this situation. I have to wonder where all the money was being spent, though. Expanding the number of employees by a lot? At the same time he complains that his development team was stretched too thin, so how does that work?
Odds are really good they were overspending on servers. At $8/user/month income they should have been very cash positive on their server costs (a to-do app should cost in the fractions of a penny per month per user to host, with a good architecture), but I've seen so many terribly designed architectures that effectively only succeed because of the piles of VC that allow them to push past the hemorrhaging of cash early on to a point where they can spend resources on optimizing their backend just enough to turn a profit.
I've consulted with a company that was literally spending 200x as much on servers as they should have been--and they were proud of their architecture!
But so many people say to ignore performance because "computer time is cheap and developers are expensive." Well, performance can mean the difference between being profitable and not.
I'm not always a huge fan of DHH but this response is basically perfect. It was borderline cringey to read the original thread.
Great points are made there. 👀
Wow. This is why I far prefer IndieHacker community. I actually commented on this Tweet on Twitter advising 1) he should have checked his monthly profit and loss; and 2) spending 2x - 3x revenue is insane. OMG, the snowflakes on Twitter nearly ripped my head off. LOL. I was just keeping it real!!
Thread unroll -
https://threadreaderapp.com/thread/1376985854229504007.html
That’s where becoming different from your competitors is important. A newcomer to the communications tool is trying to take Slack head-on by saying “Stop slacking, start rocking.” Also, I think the freemium model is essential for SaaS products, which it seems Flow doesn’t have. I think that’s another way Asana can be one of the top. It doesn’t take any money to start using it, whereas Flow only has a free trial.
"At this point, I had invested millions of dollars, without even realizing it." - That right there combined with greed and jealousy is why it failed. Always watch the money!
It also sounds like you got bested by Dustin!
One thing I've learned hard is never bring emotions into any business model, no matter how much you care about the problem or customer.
Keep plugging though and you'll make it back on something else.
Another Jack climbs the beanstalk and gets eaten story. When you punch through and wake the giant make sure you're moving so fast you can't be caught or be prepared to merge / be acquired to survive.
but honestly speaking Asana sucks and clicup is far better even flow is elegant.
yea dats true, but he should not have competed with asana, instead focus on his niche audience!!!
That was a great read, thanks for sharing!
Big takeaway for me was that it is important to regularly take a step back and see if your strategy still makes sense. Seems like the Basecamp model worked great at first, but as the stakes (and costs) got higher, it quickly became a risky money-sink.
agency work... ugh!
It's only because of the agency work that he had the $10 million to lose on his bootstrapped product!
ooph. so hard.
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people should just quit using twitter, it's very toxic
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I made it through but it's very jarring lol.
Feel like threads are the complete opposite of what twitter is for haha
i agree it sucks.
But the answer is distribution. If he wrote an article it wouldn't get 1/10 the views.
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he could. threads get 10x the views though.
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It's a growth hack. Each tweet can be shared separately.
Andrew Wilkenson is great but is also a master spinster ...
Yes it's kind of like that anecdote of a grandpa who thought every new email required a new PowerPoint slide as attachment. Completely flabbergasted.