Mar 15, 2024 · 16m · founders-journal
How I Lost $10,000,000
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In this episode of Founder's Journal, host Alex Lieberman analyzes tech entrepreneur Andrew Wilkinson's candid post-mortem on losing $10 million attempting to bootstrap task manager Flow against venture-backed competitor Asana. The breakdown delivers key entrepreneurial insights on SaaS unit economics, capital strategy, and why distribution advantages routinely outperform product design alone.
Statements from this episode (18)
Podcasting Grows Only Through Word Of Mouth And Social Media
“Podcasting is a super competitive game, and the only way to grow is through word of mouth and promotion on social.”
Wilkinson Grew MetaLab To $40M-$50M Revenue And $20M Profit
“In 2007, Andrew started a Canada based design agency called metal lab, which he grew to 40 to fifty million dollars in revenue and twenty million in profit.”
Agency Businesses Provide Paid R&D And Cash Flow Without Upfront Capital
“I think one, because it's basically paid R&D to figure out what you want to build outside of just the agency, and they're great for cash flowing and you don't need money up front, but to Andrew's point, they are extremely difficult. Any client service business…”
Flow Reached $20K MRR In First Month And Grew 10% Monthly
“When we turned on billing for our beta users, we jumped to 20,000 MRR in the first month. We started growing at 10% per month, and we're the new hotness.”
Wilkinson Spent 2-3x Flow's Monthly Revenue From Personal Funds
“I was consistently spending two to three times our monthly revenue and losing money, and not venture capital out of my personal bank account.”
Businesses Typically Fail From Small Cuts Rather Than Sudden Implosions
“And by the way, this is the way that businesses typically die. It's not one spectacular implosion. It is cut by cut that slowly bleeds out of business, but because they are small cuts, you don't realize how big of a problem they are.”
Flow Burned Over $150,000 Per Month Competing With Asana
“By this point, we were burning over a 150,000 dollars per month.”
Wilkinson Burned Over $10M And 12 Years Competing With Asana
“12 years and over ten million dollars lit on fire. We are done burning money in a losing battle.”
Flow Failed Due To Inexperience, Product Myopia, And Capital Constraints
“We lost the war due to inexperience, product myopia, and a lack of capital in a highly capital-intensive and competitive space.”
Flow Reached A Peak Of Approximately $3 Million In ARR
“At its peak, Flow did about three million dollars of ARR.”
Flow ARR Dropped To Approximately $900,000 At Break-Even
“Today, it's sitting at about 900,000 dollars of ARR, break even with a low growth rate.”
Wilkinson Predicts Flow Will Never Capture Large Productivity Market Share
“Sure, it could turn into something, but I will never make my investment back, and barring a miracle, it will never own a large chunk of the productivity market.”
Competing In A VC-Funded Space Without Capital Is Foolish
“If you're in a competitive VC-funded space, it is foolish to compete without raising money.”
Product Quality Is Not A Long-Term Competitive Advantage
“The best product doesn't always win, and product is not a long-term competitive advantage.”
There Is No Moat In Productivity Software; Founders Should Avoid It
“There is no moat in productivity. Avoid it if you can.”
Operating SaaS Without Churn And CAC Metrics Is Reckless
“Running a SaaS business without deeply understanding churn, LTV, CAC, etc., is like flying a plane without instrumentation.”