A while back I wrote:
I've had many, many failures in my life. (Hm, maybe I should write a blog post about that.)
This is that post. I'm writing it not as a lament, but rather because I've ended up in a good place in life despite my extraordinary track record of failing at just about everything I've ever tried. If my younger self had heard these stories he might
have had a less stressful life knowing that even a long string of
failures in specific endeavors doesn't necessarily translate to
failure in life. Maybe some version of my younger self is still out there and will get some similar value out of it.
Intro
Growing up, I had two major life ambitions: to become a tenured university professor, and to found a successful startup company. My role models were people like Rodney Brooks (who was on my Ph.D. thesis committee) who made a big splash in the AI/Robotics world in the early 1990s with the Subsumption Architecture, and was a co-founder of Lucid and iRobot.
I didn't accomplish either of those goals. I never even got an interview for an academic job, let alone tenure. I made six (and a half) attempts to found a startup. All of them failed.
Failure #0: Professor Ron
In elementary school, my ambition was to be a doctor, specifically a brain surgeon. That dream died in high school biology class when we had to dissect fetal pigs and I discovered that I was a lot more squeamish than I had thought. So I traded my surgical scrubs for a computer keyboard and set my sights on AI instead. Fast-forward to 1991, when a freshly minted PH.D. started sending out curriculum vitae (that's academic-speak for "resumes") to CS departments. Unfortunately, my timing could not have been worse. It was the height of AI Winter and the first Bush recession, and the few universities that were hiring were getting hundreds of applications for single openings. My publication record was not great. I hadn't published a single journal article. My main conference publication (PDF is here) was well received, but (apparently) insufficiently academic for academia. I didn't even get an interview.
So I just stayed where I was, which was JPL. I've told that story elsewhere so I won't repeat it here. Suffice to say, my JPL career had ups and downs, but eventually entered a long and steady decline from which it never recovered. But the reason that my career declined had nothing to do with JPL or any external circumstance, it happened because I gradually came to realize that scientific research was not what I had imagined it to be. In the real world, research is not a Platonic quest for objective truth. It is, first and foremost, a human endeavor, deeply intertwined with human ambitions and foibles, including my own. The reason my career lasted as long as it did was that I learned, at least to a certain extent, how to work the system. I was nominally successful, eventually becoming the most cited AI researcher in all of NASA according to a popular metric at the time (Citeseer). But as time went by I became less and less proud of the work I was doing, and the entire field seemed mired in a stasis that I felt powerless to dislodge. So I quit.
Lesson learned: academic research is no panacea. (I think things are actually worse now than they were in my day.)
Failure #1: FlowNet
I spent the summer of 1990 as a visiting graduate student in Rodney Brooks's lab at MIT. While there I met a brilliant hardware engineer named Mike Ciholas, who went on to found a company that today employs dozens of people and bears his name. He pitched an idea to me for a new design for a computer network that he called FlowNet (full text is here). We built working prototypes. If they had gone into production they would have had more than an order of magnitude price-performance advantage over the competition at the time. We had numerous meetings with VC's, but none of them ever gave us a term sheet, probably because they knew what we did not: Fast Ethernet was coming, and although it would be expensive at first, it would quickly get commodified and beat out any potential competition no matter how technically superior it might be. We built our prototypes in 1993. Fast Ethernet came out in 1995. We folded up the tent in 1997.
Lesson learned: direct frontal assaults on infrastructure and standards are very unlikely to succeed. More worthy players than us have learned this lesson the hard way over the years.
Interlude: Google
In 2000 I went to work for an obscure little Silicon Valley startup company. I've told that story elsewhere so I won't tell it again, but I wanted to mention it for two reasons. First, it sets the stage for what was to come, and second, while it was unquestionably a success, it was not my success. In fact, on a personal level I count Google as a failure as well. My tenure there was marked by a long series of screwups, and I had a serious case of impostor syndrome. I lasted a year, but after that I went back to JPL to bide my time until the IPO.
Failure #2: IndieBuyer
The Google IPO allowed me to quit JPL and pursue my entrepreneurial ambitions more seriously. With the benefit of hindsight I should have moved to Northern California and hung out at Y Combinator, but I had lived in Los Angeles for 17 years at that point, which was longer than any place else I had ever lived before by a wide margin. By my standards at the time, I had deep roots there. I have also always had a love for magic and movies, and Los Angeles was the epicenter of both of those industries. So I decided to try to do something in the entertainment space.
The result of that was a company called IndieBuyer, which was going to be Netflix for independent films. The idea was that technology was making filmmaking more and more accessible, leading to a long tail of undervalued product that couldn't find an audience because of the bottleneck presented by a distribution system designed for more capital-intensive projects. The business model was that we would sell DVDs (which were still very much a thing back then) but with a money-back guarantee: if you bought a DVD that we recommended and you didn't like it, you could return it for a full refund. The returns would provide the data for a recommendation engine that would, we hoped, over time become a better and better predictor of who would like what kinds of movies. The long-term business model was to intelligently match niche products with niche audiences at scale.
It was a plausible idea, and it might have even worked if we had been better capitalized. But I was funding it entirely from my own pocket, and after a couple of years with very little growth I lost my nerve and decided to pull the plug. We did try to find some outside investors, but because we had already launched and weren't showing much traction, we didn't attract any interest.
Lesson learned: it's really hard to make money in the movie business.
Failure #2.5: Evryx
This is the half-failure alluded to in the title. I count it as half a failure because, although I was actively involved, I was not a founder. Evryx (which eventually rebranded itself as SnapNow) was founded by another engineer at JPL. The company was an early pioneer in reverse image search. It used an algorithm called SIFT to match an image taken with a cell phone to a library of stored images and provide information about whatever was in the image. I was never entirely clear on what the business model was intended to be, but the technology seemed cool. I happened to mention it in passing to a friend of mine whom I had met at a political fundraiser. He looked into it and got sufficiently excited about it to become their CEO. The founder became CTO.
About a year later the company had a crisis: the founder/CTO was behaving erratically, and my friend, the CEO, decided he had to fire him. He tapped me to come aboard as acting CTO until a permanent replacement could be recruited. The company limped along for another year or so but ultimately folded in 2007, in no small measure because of the fallout from the financial crisis that began that year. The CEO had actually managed to secure another round of funding, but it was voted down at a shareholder meeting, with the (fired) CTO casting the deciding vote against. The company folded a few weeks later. The bankrupt entity was eventually acquired at a fire-sale price by a private investor, and I have no idea what happened to it after that. It was sitting on some potentially valuable IP, so maybe they were able to do something with it.
Lesson learned: even smart people can do incredibly stupid things. The CTO said he voted against the financing because he didn't like the terms and didn't want to be diluted. The result was that his intact share of the company ended up being worthless.
(I actually saw a similar thing play out at another company in which I was a passive investor. The technical co-founders basically torpedoed the company, but in their case they went on to start a new company with the exact same IP and business model. It was blatantly illegal, but to that point the company was funded entirely by small angel investors, and no one was willing to put up the resources to try to stop them. So they got away with it.)
Failure #3: iCab
In 2009 my wife and I took a cruise around the Pacific rim. At one point we ended up in Saigon and needed to get back to the cruise ship, but couldn’t find a taxi. I thought to myself: this place is chock-full of taxi drivers, all of whom have cell phones, and many of whom have smart phones. Someone should write an app that would let me broadcast the fact that I'm standing in this location looking for a ride. It was a brilliant idea. Unfortunately, Garrett Camp and Travis Kalanick had the exact same idea at the exact same time. I founded a company called iCab, and they founded a company called Ubercab, which eventually changed its name to Uber.
iCab was stillborn. It was never even established as an actual company. I assembled a team, mainly people I knew from Evryx, and wrote a prototype app which actually worked. But we couldn't figure out a way to procure drivers. We were in LA and we tried pitching the idea to cab companies, but they were not interested. The idea of using black car limos never even occurred to me. With no supply chain, we folded up the tent before we had even pitched it.
Lesson learned: a brilliant idea is not enough. You have to execute. And sometimes that requires another brilliant idea.
Failure #4: Virgin Charter (nee Smart Charter)
In 2010 my wife and I decided to get an apartment in Santa Monica so we could spend more time by the beach. I started hanging out in the offices of a venture capital firm with an office on the Third Street Promenade. One day a fellow named Scott Duffy walked into the office and asked if he could hire us to do due diligence on an acquisition he was considering. I don't remember the name of the company, but it collected business intelligence on the private aviation industry.
In the course of conducting this due diligence we learned that the private jet market is incredibly fragmented and inefficient, with dozens of operators most of whom had only a small handful of planes. At the time there were a few thousand private jets operating as charters, but there were only three operators with fleets of more than 100 planes. The largest of these was NetJets with (if memory serves) about 250, only about 10% of the total.
To match customers with aircraft, a secondary industry of brokers had cropped up. If you wanted to charter a jet you would call up a broker, give them your mission parameters, and then they would start making phone calls and sending emails and faxes (yes, fax was still a thing back then) to try to find a matching aircraft. The turnaround time to get a quote was measured in hours, and actually securing a reservation could take days.
But even worse than the time involved was the fact that when an aircraft took you somewhere, it eventually had to return to its home base. Most of the time this happened in one of two ways: you either paid to have the aircraft (and its crew) wait for you and take you back, or you had to pay for two round trips. About 40% of legs flown by private jets were flown empty. This led to a secondary market of brokers trying to sell these empty legs, which had already been paid for. If you were lucky and happened to find one that was flying a route that you wanted to travel, you could pick one up for a song. The empty flight was already paid for, so any revenue at all was pure profit.
The problem is that most of the customer base for private jets want to go where and when they want to go, not where and when a plane happens to be available, so it was rare to actually sell an empty leg. But if you've ever wanted to fly on a private jet and you are flexible with regards to your timing and route, you could (and still can) find some very good deals.
One man's inefficiency is always another man's business opportunity. I realized that the problem was the lack of a centralized clearing house for demand. If we could somehow collect all the data on who wanted to go where and when, we could route the fleet much more efficiently. We crunched the numbers and it turned out to be a billion-dollar business -- if we could somehow pull it off. The problem was that the customers and the suppliers all depended on the brokers. In order to succeed we wold need to wrest both away. How to do it?
I came up with the following diabolical plan: build a web site that would let people enter their trip details, and then give access to that data to the brokers as a lead generation service for a very modest fee. The fee was actually a red herring to disguise the fact that we were secretly plotting to put the brokers out of business. It would be an offer they couldn't refuse: more customers for a small amount of money. But once we reached a critical mass of users, we would start phase two: offer that lead data directly to charter operators so they could bypass the brokers. Again, it would be an offer they could not refuse. We would offer these leads to the operators for free, and it would be a much faster and more efficient way of getting bookings because the whole process would be automated. As a bonus, they could pocket what would have been the broker's commission.
Finally, once we had a critical mass of operators on board, we would start phase 3, a centralized scheduling service that would dispatch the entire fleet in order to minimize the number of empty legs being flown. Again, it would be an offer they couldn't refuse. Anyone who didn't subscribe would have to charge significantly more for the same product in order to pay for the additional empty legs, and market forces would eventually drive all the customers to us.
To this day I'm pretty sure that plan would have worked if we had actually executed it. It was a brilliant plan if I do say so myself. In fact, it was so brilliant that it convinced Richard Branson to acquire the company before we launched for $10M. We started the company as Smart Charter, but we launched as Virgin Charter.
I vehemently opposed the acquisition, but I was overridden by my two co-founders. When I lost that fight, I resigned from the company, but I kept my shares on the off chance that my intuitions were wrong and Virgin would actually make it work. Unfortunately, my fears were well-founded. As soon as they took over, they changed the business model to be directly consumer-facing, because that is Virgin's strength. Instead of a stealthy three-phase plan, they went for a direct assault on an established industry with very little understanding of the actual dynamics of that industry. Charter jets are a very rarified market. There's a lot of dollars involved, but not a whole lot of people, and those people don't like to be treated like ordinary consumers.
At our peak we had dozens of sales people. They all sat around the office with almost nothing to do. This was made all the more ironic by the fact that the original business model required fewer than ten people and probably could have been run on a single server. Even at 100% market share, the volumes in private jets are just not that high.
Lesson learned: Be careful who you take on as a partner. Success in one industry does not necessarily translate into success in another. This is another lesson that others have learned the hard way.
Failure #5: Founder's Forge
After being stung so hard by the private jet fiasco, I decided to design a business that I could run entirely without partners. This was around the time that Bitcoin first appeared, though it would still be many, many years before it broke out of hacker circles and into public awareness. I had always been interested in cryptography, and there were parts of Bitcoin's technology that I found very appealing, particularly its use of public-key cryptography and digital signatures. I foresaw increasing problems with credit card fraud because of the fact that the protocol was fundamentally broken: the credentials that you use to authorize a transaction are not bound to that transaction. They can be re-used. This is still the basis of most credit card fraud today, and it's the reason your card has a chip in it. That chip has a secret key in it, and it computes digital signatures. That makes it impossible to re-use the authorization for one transaction on a different transaction, and makes the credentials in general harder (but still not impossible) to steal.
The problem is that you can't use that chip for e-commerce. It's not because this is inherently impossible, it's just that the infrastructure to do it doesn't exist. There is no reason you could not have a card reader peripheral plugged into a USB port that would execute the same protocol that point-of-sale terminals use and provide the same protection. In fact, there is no reason why you even need any hardware at all. The entire protocol could be executed entirely in software on your computer or smart phone. It would cost next to nothing and it would eliminate most credit card fraud. So why hasn't it been done?
It is because the process is controlled by the banks, and the banks don't care. Why don't the banks care? Because they treat the cost of fraud as just another cost of doing business, and they pass it along to you, the consumer. And they do it in a diabolical, stealthy way that you don't notice. But that's another story. Back in the day, I was not yet aware of all this. I thought that fixing credit card fraud would be, if not welcomed, at least not actively opposed. I was wrong.
I knew that the banks controlled the credit card system, and I knew they comprised a massive, ossified industry that was going to be next to impossible to penetrate. So I came up with a plan that would hide the fact that I was trying to solve credit card fraud by presenting it as a completely different product addressing a completely different problem and market.
The idea was this: by this time I had a fair amount of experience starting and running companies, and one of the "pain points" was financial record-keeping. Making sure the books were up to date was a sufficiently serious chore that most companies employed an entire team of people to do it. (There's a reason that "the finance department" is a thing.)
The fundamental reason that record-keeping is a chore is that the records are decoupled from the transactions they record. This is for historical reasons. You can easily hand someone a dollar, or write them a check, or swipe your credit card without writing down that you did these things. In the vast majority of cases you have to manually connect the record of a transaction with the actual transaction itself.
But in an age where most transactions are electronic, this doesn't have to be the case. There is no reason why you can't build an interface in which the authorization and the record-keeping are one and the same operation, and if you do that, they cannot fall out of sync. So the idea was to provide a service that coupled transactions and record-keeping to guarantee that they always remained in sync. And the interface to the authorization system would quietly use digital signatures as the authorization mechanism. The users of the system would mostly be unaware that there were digital signatures happening under the hood, just as the users of chipped credit cards are mostly unaware of this.
The company was called "Founders Forge" because the initial target market was going to be startup companies. The name was a play on "SourceForge", the then-popular open-source hosting site. But all of that was a red herring because the real plan was to replace credit cards with digital signatures for e-commerce.
Of course, to make all this work I needed a way to move money around, and for this I needed a bank. I always knew that was going to be the heavy-lift so I focused on that early, long before I had even a prototype product ready to launch. As things happened, I never even built a prototype because the banks turned out to be an impenetrable brick wall, but that impenetrability manifested itself in a very unexpected way.
I approached banks with the following pitch: I am building an accounting system for startup companies, and I want to link it with their actual financial transactions. So I need access to an API to allow me to authorize transactions on my client's behalf. The clients will authorize me as their agent so it will all be on the up-and-up. The benefit for the bank is that I would funnel them a steady stream of new business in the form of the most promising Silicon Valley startup companies.
Somewhat to my surprise, this pitch was very well received. I got positive responses and follow-up meetings from half a dozen different banks, and I thought I was on my way.
But then events took a very unexpected turn. One by one, every bank that had initially responded positively changed their minds. Worse, not a single one of them would tell me why. They said, "Sorry, turns out we can't do it" and then stopped returning my calls. In one case I actually got as high as the bank's CTO, who seemed very excited about the idea, but then he too suddenly backed off. At that point I decided to quit, and went into a deep existential crisis for a while. I had been working on Founders Forge for about six years.
I never got a straight answer from any of the banks about why they changed their minds.
Lesson learned: never underestimate the capacity of the banking industry to stifle innovation. (Also, it really does appear to be run by a shadowy cabal of people you will likely never meet.)
Failure #6: Spark Innovations
I don't actually remember exactly how my last company got started. I did this one with a partner who handled the business side of things, but was also a really good designer and front-end developer, so we made a kick-ass team. The product was motivated by the observation that people used Microsoft Excel for purposes that it was never really intended to serve. In particular, people tended to use it as a replacement for a SQL database. The idea was to build a product with a spreadsheet-like UI, but with a SQL database on the back end. We had three launch customers lined up, all of whom seemed to be very excited about the idea. While we were building the MVP we had a previously scheduled meeting with a VC acquaintance. We told him what we were working on, not really intending it to be a pitch, but just FYI. In one of those legendary Silicon-Valley moments he got so excited about the idea that he asked us to let him invest just to get a foot in the door. We didn't really want to take any money until after we launched, but he insisted, so we capitulated.
To make a long story short, we launched, and all three of our launch customers suddenly lost interest and didn't tell us why. It was a similar situation that I had encountered previously with the banks. No feedback, just suddenly not interested and not returning our calls. At that point my partner had to quit because he needed a paycheck. In a final desperate hail-mary I tried to pivot the company to something I could do on my own, but that didn't work either (obviously). I'll spare you the details on that one.
And that's it. My tale of six and a half failed startups plus one failed academic career, all of which somehow added up to a good life at the end of the day. Of course, hitting the jackpot with Google didn't hurt, but I really don't think that was the whole story. I learned a lot. I grew a lot. And I think my current happiness stems mainly from the fact that I like the person I've become, someone who can fail again and again and again and again and still find a way, for the most part, to be happy.
