The Fall of a Young Founder
A cautionary tale of chasing a flawed idea
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Last week, I wrote about “How to Kill Your Ideas.” I shared some of the pain I’ve gone through in being an Idea Person and how I learned to check my compulsions.
I was going to share a story about another person who suffered mightily through his Idea that has been going through my head for 15 years. But I left it on the cutting room floor. Until I met Andy last week…
Andy is a high school student whom a mutual friend introduced me to. He’s not even in his senior year yet, but he has a Big Startup Idea and wanted to pick my brain about it.
I Zoomed into our meeting and caught sight of signed basketballs and other age-appropriate artifacts on the shelf behind him. But this was no ordinary kid. He spoke at an accelerated pace, rattled off examples of apps he had coded, and quoted great books he had read. Before I got a word in, Andy repeated his dream to “Make a Bazillion Dollars” three times.
He didn’t have any specific questions for me, so I took a deep breath and let my mind wander into whatever the universe thought I should say…Then, BOOM! The weighty story of another very young founder resurfaced in my mind. I cleared the decks of whatever else we might have covered, and I told Andy a story…
Only the names have been changed.
A Tour of Silicon Valley
It’s Spring 2011, and I’m on a tour of the startup scene in Silicon Valley with my friend+client, Kevin, and my friend+host, the innovation lead at a large corporation, as well as a good friend, Sonny.
After completing the sale and earnout of my ad agency, I’ve landed a Chief Strategy Officer role within our holding company's group. The problem is, I’m not sure what to do in this job. Each agency office has its own team and P&L, so I’m not running anything for a change. They aren’t asking me for help, and I don’t want to tell them what to do.
So when my friend, Sonny, casually mentioned hosting me in his world for a couple of days, I jumped at the chance. Not only would it give me something to do, but it might help me get some insights and introductions toward my still-simmering desire to launch my own startup one day.
Sonny’s job, too, is a bit murky. He’s the innovation lifeline between tech startups and his big, boring packaged goods company in the Midwest. Back then, many large companies felt they needed a presence in the Valley. And smart people like Sonny carved out an interesting niche. He mostly keeps track of startups in the marketing space and red-eyes back to the home office every six weeks or so to deliver insights.
Still, I felt a bit guilty doing such a trip on the company dime. So I looked for a client that I could bring with me. In the agency world, spending quality time with a senior client means you get a blank check.
(Yes, I’m looking at all of you—and myself—who are going to the Cannes Lions next week)
The first client that came to mind is Kevin. We became friends at his previous company, and he brought us into his new job as well. Kevin truly loves innovation and is a wonderful person to hang out with. He committed to joining us immediately.
Today, Sonny picks us up from our hotel, and we begin to visit a handful of his favorite startups, starting in San Francisco and ending in San Jose.
Each startup is a fascinating ecosystem of fast-moving young people in cramped quarters, plugging away at the future of advertising. And each revolves around a charismatic founder who radiates passion and vision. They drop everything to tell us their personal and company stories—after all, we’re potential clients. I can tell they’ve given these pitches countless times, but they’ve learned to keep their energy fresh.
Damn, I want to be in their shoes someday.
This is where the magic of business is happening today. It’s in the air everywhere. This is where the new Mecca of money and meaning.
A Very Memorable Lunch
No trip to this wonderland would be complete without a meeting with a Venture Capitalist.
Sonny brings us into a Mexican restaurant in the heart of it all. As we walk up, he tells us that this is where all the top investors and founders meet. He rattled off celebrities like Jobs, Zuck, Andreesen, and Dorsey, who had casually sat at tables near him before.
Today we’re having lunch with “Matt,” a silver-haired VC who is one of the top names on Sand Hill Road. Matt is a regular guy: Friendly, sociable, plays tennis, has older kids. He asks us a few polite questions about our businesses and families.
With the ice broken and appetizers delivered, Matt starts to tell us the story of his newest startup investment. And he’s really excited—like weirdly excited…
“We just invested in this kid, ‘Nate,’ who is 19 years old. He skipped four grades and graduated from college last year. He’s a genius…codes 18 hours a day, quotes philosophy. And we put the first and biggest check into his startup. He’s going to be the next Zuckerberg.”
I was fascinated. Is this how it works out here? VCs throw money at teenagers? My mind thought about NBA scouts who had started attending Middle School basketball games, trying to find the next Kobe before anyone else did.
Finally, Matt shares Nate’s business idea with us. It’s a new approach to digital advertising within mobile games. Instead of free-to-play games interrupting the gaming experience with ads, it would allow marketers to offer free prizes between levels, like 50 cents off a coffee at Starbucks.1
Now, I’m a HUGE fan of any form of marketing that offers value instead of interruption. In 2008, I wrote a book about “Marketing with Meaning” and toured the world, delivering keynote speeches on the topic.
However, as someone who has been on both the brand management and ad agency sides of digital marketing since its inception, I know exactly why this idea will never work. Mainly, it’s a scale issue: there are just not enough people who play these games or act on such offers in order for it to make a dent in product sales.
And it’s certainly not worth the massive changes in behavior that would be required within the marketing ecosystem for something like this to work seamlessly.
I’ve seen ideas like this launch and fail multiple times before. It sounds like it should exist to a 19-year-old who can code, and to a 60-something VC who is hoping to have found the next Mark Zuckerberg. But it will never move beyond the land of corporate innovation budgets.
Our lunch eventually ends, and the three of us pile in the car, headed to the next stop Sonny has arranged for us. But I can’t stop thinking about Nate, the brilliant teenager, working on an idea that seems hopeless…
The Rise and Fall of a Founder
A little part of me kept thinking about this story, and I followed the progress of Nate and his company across the years.
Why did I follow this story? It’s complicated…
I was genuinely curious—Could someone finally crack the code on this idea? Might I be proven wrong and learn to adjust my model of how the marketing world works?
I felt empathy—Knowing that Nate’s idea was likely to fail, I felt bad for the guy. With all his brilliance and potential, he was striving away on something pretty pointless. I could see the pain in his future. And even if his advertising startup was a giant success, is this what we want our young geniuses working on?
I was envious—It’s not fair that someone with zero business experience could be given millions of dollars in VC money. A few months after this lunch, I launched my own ad-tech startup. Matt and many other VCs on Sand Hill Road didn’t return my calls. To be honest, I was rooting for Nate to fail.
Every few months, I would catch the news of Nate’s company on LinkedIn or in the trade pubs: More rounds of money raised, another office opened in an international city, and another 30-under-30 award received. Through the valuation set by his startup’s investors, he became a self-proclaimed self-made millionaire by age 20.
Nate eventually published a book titled Cutting Corners. He filled it with pithy secrets to his success in launching a company and raising millions of dollars. The book led to more media opportunities, more corporate pilots, and more VC backing.
But I still couldn’t find a client or ad agency that was buying this media alternative at scale.
Soon, the lack of news coverage became telling. No further funding rounds were announced. LinkedIn employee counts began their descent, always a sign of trouble in a startup.
Eventually, the media coverage took a turn for the worse…
The company was served with a class-action lawsuit for collecting and using personal information about users without their permission. This is one of those many dangers of trying to disrupt the advertising industry. As Nate’s firm was struggling to raise cash, it settled for $1 million.
Then, Nate was accused of sexual assault by a female college student he met at an industry conference. He was removed from the company and replaced by a new CEO.2
Unsurprisingly, Nate’s startup didn’t survive. Before the end of the year, it entered bankruptcy.
Where Do We Go From Here?
Nate’s still out there, plugging his book about cutting corners. He created two different solo investment firms. His website continues to highlight the money he raised at a very young age. And he still lists his three-peat of 30-under-30s, even though he’s now creeping up on age 40.
So this tragic story goes through my head as I’m now a (slightly) silver-haired investor talking with a teenage business prodigy…What can we take from this?
First, we must speak with care when working with young people, especially when we hold a position of power and our income is tied to theirs.
I’m sure Nate felt special when VCs lined up to put checks in his hand. But the day he accepted those checks and pushed the press release, he attached himself to a weak idea for the next decade. As things soured, the investors moved on to find the next, next Zuck. They only need 1 out of 10 bets to pay off. This is no different than NBA teams taking a chance on a young talent who skips college and tossing them into the D-League a few weeks later. We must be better than this.
This is a lesson for parenting, too. With love in our hearts—instead of dollar signs—we tell our kids “Follow your dreams,” “You must go to college,” or “Learn to code.” However, we have no idea what career strategy will work next week, much less next decade. All we know is that the jobs of tomorrow will be different than what they are today.
I don’t know where the economy is going, but I do know something I wish I had dealt with a lot sooner: Envy ends up biting us back.
When we see someone else in our industry, college graduating class, or hometown who seems to be “killing it” while we’re still struggling, the truth may be that they, too, are in pain.
While I spent years being envious of Nate, I had my own misguided idea for an advertising startup, which I wasted millions of dollars of my own and investors’ money on. The time and energy I spent wanting to be a typical Silicon Valley startup founder distracted me from building something customers actually wanted.
Luckily—and luck is such a critical word here—I finally burned my ego, looked within, and we turned our business into a success story.
As I hope Nate now knows, and we all must remember when times get tough, there is always an opportunity to start over. And the younger we are when we learn these lessons, the more time we have to benefit from them.
If you like my writing, feel free to click the ❤️ or 🔄 button on this post so more people can discover it on Substack 🙏
How we might work together…
Headed to the Cannes Lions Advertising Festival in June? Let’s meet up! I’ll be there with our team from A2 Influence, our content development agency that helps some of the biggest brands and retailers create and distribute authentic content at scale.
Fleet is our holding company for services businesses. We invest in leaders ready to start their own companies (we also do some M&A). If this might be you, hit my Office Hours link.
Revelin is our consulting practice that helps with revenue alignment, growth management, and other RevOps functions. CEO Jess Shuman is standing by to share a no-cost assessment of your business.
Feel free to schedule a chat during my Office Hours to discuss questions, feedback, networking, or any other topic. Seriously, any topic! You can also reach me on LinkedIn or by email.
BONUS: Cool Content of the Week
A little something I found meaningful. You might agree…
The Bluetooth Test and other keyholes to the soul
I wish I had realized much earlier in life that my envy was a reflection of my issues. Today, I’m working on watching my reactions and using the outside world as a mirror into my own soul. It’s an endless source of evidence of what I need to work on and a measure of progress on the journey.
If this is a tempting path for you, may I recommend Adam Mastroianni’s post, “The Bluetooth Test and other keyholes to the soul.” Here, he shares seven ways of “peeking into your innermost self, so you can make sure you like what you see in there.”
My favorite is #5: The Match Your Freak Test. “Every moment you’re with another person, you are implicitly asking, ‘If I’m a little bit weird, will you be a little bit weird too?’” That’s kind of the theme of this entire Substack…
It’s funny how every new marketing idea lists “a coupon at Starbucks” as their potential use case. I’m still waiting for Starbucks to actually execute one of these ideas. I mean, does Starbucks even issue coupons?
Years later, he pleaded guilty to indecent assault. I do not know what happened. However, it mirrors some of the situations that young star athletes have found themselves in. Absolute power and money poured on the young and immature can be corrupting. This is NOT an excuse, of course.
Great read, Bob.
“Envy ends up biting us back.” What a line. Enjoyed how you reflected on your own experiences in the process of burning the ego.
Your storytelling infused with insightful and practical business knowledge makes your Substack one of the highest value publications I read Bob. Great content, from week to week. Thank you.