I Ran My Startup Out Of Money More Than Once
Turns out you don't always learn lessons the first time around
I’ll start off with the disclaimer that every single debt we ever owed was paid.
Sometimes they were paid with interest that we didn’t technically owe but still paid in gratitude for people’s patience. I know my first instinct on seeing a post like this would be to think “I bet that asshole screwed some of his players out of money”.
We didn’t.
The first person I stopped paying when funds ran low was myself. I even took out loans to make sure players got paid, and many times I used my own money to pay others. I felt this immense responsibility to the people who worked for me. They trusted me. When they signed a contract to work for us, they were believing that every time payday came around there would be money in their bank account. I needed to deliver every single time. A failure on that level would have crushed me.
Long before Splyce was what it became at its height, I was a just a naive, inexperienced CEO sitting in a conference room at our local incubator with two of the in-house experts. Matt and Don were there to help guide me as I planned out the business. They made a really great duo, too, since Matt was a young successful tech founder and Don was a hardened, older, realistic guy. One guy got to see the vision with me while the other slapped me down to reality. Without either, it would have been much more difficult to develop a good path forward.
I had shown them my plan for our first fundraise, where I would bring in $300k to grow www.followesports.com to profitability. Don looked at me and asked me “so your plan is to raise 300k and quit your job to do this full time?” I told him it was. He laughed at me. Not in an insulting way, but to really drive home his point. “Your company will be bankrupt and you’ll be unemployed in six months.”
I tried convincing Don that my plan was sound. He wasn’t biting. What I couldn’t see then, and what I missed so many times after, was that my job in that moment wasn’t to convince him. My job was to listen.
So often when running Splyce, I found myself in the position of having to convince. That’s a big part of the job. Yes you should invest in us. Yes you should do business with us. Yes you should work here. Yes you should partner with us. You’re constantly doing some sort of sales, whether you realize it or not. The problem was that I turned it into 24/7 sales, even when I wasn’t supposed to be selling. When my board would question our budget I would try and sell it to them. When an advisor would point out a flaw in a plan I’d push to convince him my plan was 100% sound. There were all of these super smart people around me who wanted to help find the flaws in our plans BEFORE they had negative effects. I was lucky to have so many smart people helping me like that. Despite the help all around me, I couldn’t get out of my own damn way and stop selling long enough to learn from what someone else had to say.
When you take my inability to let others help me find flaws in our plans and combine it with a dose of optimism that everything will work out plus a lot of inexperience building businesses you quickly find yourself on the brink of disaster.
I won’t go into the nitty gritty details of how we ended up with an empty bank account each time or how it crushed my emotional state, but I can tell you it didn’t happen just once. We’d be on the brink of disaster, zero dollars in the bank and a week until payroll was due, with no hope in site. If this were a movie, I’d look like the hero because I always found a solution and MacGyver’d my way out at the last second. Disaster would be averted, we’d all breath a sigh of relief and it was easy to quickly forget that we were in this position in the first place because I wasn’t allowing myself to be advised nor pivot the plan when it wasn’t working. I was forcing that damn round peg through the square hole whether it wanted to fit or not.
But the elephant is in the room
The truth is in your face
When you hear the British cannons go
BOOM!!
- Hamilton: An American Musical. By Lin-Manuel Miranda
I got a big wake up call each time disaster struck again. I could pretend everything was going great and that we weren’t in any sort of peril, but that wouldn’t stop the peril from happening anyway. That elephant was always in the room, taking up a ton of space.
So I told you that I didn’t learn the lessons while I was running the company, but you may have guessed that I’ve used that 20/20 hindsight thing a lot since we were acquired. I came away with a few thoughts I wanted to share:
Want to build a company? In the words of Ice Cube, check yo self before you wreck yo self. Ego can completely dominate your day if you let it. Just check in with yourself on occasion to see if you’re really listening to anyone other than your own ego. Even better if you can find people on your team who aren’t afraid to call you out (and that you trust to call you out)
You don’t have to do everything!! A big part of our budgeting problem was the inability to not do certain things. We wanted to be a part of all of it - every game, every league, every meeting, every event. This attitude was costly, in every aspect of the word
Be agile with your plans. Even if you have a board approved budget, they will never get angry with you because you came to them and said “we have more information now and this thing isn’t working so we are shifting money here and here’s why”. That’s the kind of leadership they want from you
Remember you’re human. There will be disasters. Shit will hit the fan. And it will crush you if you let it. The main defense you have is to accept that you can’t pull everything off perfectly and learn from it the best you can. No one can ask anymore than that of you
So if I were building a company today, you might think “he’s learned his lesson, he’s got it”. It would be easy for me to agree with you and have that type of hubris. But if there’s one major takeaway I have from my brushes with bankruptcy it’s not to underestimate the potential for disaster when you get complacent.
I’m still just a human and I’ll keep making human mistakes for the rest of my life.
The difference is now I’m able to be at peace with that and not let it define me.
So basically you were/are an utterly incompetent ego maniac...