Sahil Lavingia (Gumroad)

Sahil Lavingia is a renowned entrepreneur, writer, and founder of Gumroad — a platform that enables creators to sell products directly to their audience. Sahil shares how he raised $10 million, burned them and then built Gumroad from scratch to become a profitable company.

What happened?

Gumroad is an online platform that enables creators to sell their products, such as e-books, music, art, software, courses, and more, directly to their audience with ease. The platform provides a straightforward way for creators to set up their storefronts without the need for complex setups or technical knowledge.

I started to work on it in 2011, and it took me several years to realize that my initial dream of turning Gumroad into a billion-dollar company wasn't going to come true.

In the beginning, everything seemed promising. We raised over $8 million in venture capital from some of the top investors in Silicon Valley.

With this funding, I built a world-class team and set ambitious growth targets. However, despite our efforts, the rapid growth we aimed for never materialized.

We burned through about $10 million, and when we tried to raise more funds, we failed.

How did you notice that things started to fall apart?

The initial realization hit me like a ton of bricks. It was a surprise, to say the least. I had been so confident that we were on the cusp of something big, and to see it all come crashing down was devastating.

The realization hit hard in October 2015 when I had to lay off three-quarters of our staff, including many of my close friends. This was a devastating blow, and I felt like a complete failure. Over the next year, I grappled with this sense of failure while trying to keep Gumroad afloat.

It was an incredibly emotional and challenging moment.

I did share what was happening with my friends and family. Their reactions were mixed—some were supportive and understanding, while others were concerned and didn't quite know how to help. Their support was invaluable, but it was difficult to face them knowing I had failed in such a significant way.

I also wrote about my experience in a Medium essay titled "Reflecting on My Failure to Build a Billion-Dollar Company," which struck a chord with many people. The response was overwhelming; it seemed that my story resonated with other entrepreneurs who had faced similar challenges.

To cope with the disappointment, I distanced myself from Silicon Valley, traveling and writing fiction. During this period, I struggled with the concept of running Gumroad as a lifestyle business. It wasn’t until I moved to Provo, Utah, in January 2017 that things began to change. Away from the intense startup culture, I had the space to reassess my goals and the nature of my business.

Sahil Lavingia (Gumroad)

In Provo, I started to see Gumroad differently. I realized that instead of chasing unicorn status, we could focus on building a sustainable and profitable business that truly served our customers. This shift in perspective marked a significant turning point.

As Gumroad stabilized and began to grow sustainably, I started to rebuild the team with a new perspective. The team we have now is lean, focused, and aligned with the principles of building a sustainable and profitable business that puts our creators first. By remaining selective and ensuring that every team member shared our vision and values, we could ensure that Gumroad remained dedicated to empowering creators and growing in a healthy, sustainable way.

What lessons did you learn from this situation?

Nowadays, I see that failure as one of the most transformative experiences of my life. It forced me to confront my limitations, reassess my goals, and ultimately find a more authentic and fulfilling path forward. Instead of viewing it as a setback, I see it as a necessary step that helped me grow both personally and professionally.

While I wouldn't wish the emotional toll of failure on anyone, the lessons I learned from my experience were invaluable.

Failure forced me to confront my limitations, reassess my goals, and ultimately find a more authentic and fulfilling path forward. Here’s why experiencing failure can be beneficial:

  • Personal Growth: Failure teaches resilience, adaptability, and humility. It helps you grow as a person and as an entrepreneur.
  • Clarity and Focus: It forces you to clarify what truly matters to you and your business, allowing you to focus on what’s important.
  • Innovative Thinking: Challenges push you to think creatively and find innovative solutions to problems.
  • Building Empathy: Going through tough times builds empathy and understanding, which are essential for building strong relationships with your customers and team.

In summary, while I advise taking steps to avoid unnecessary hardships, I also believe that experiencing and overcoming failure can lead to profound personal and professional growth. It’s through these experiences that we often find the most clarity and purpose in our entrepreneurial journeys.

Sahil Lavingia (Gumroad)

After navigating through the challenging times with Gumroad, I'm proud to say that we emerged stronger and more focused than ever. By prioritizing sustainability and customer value, Gumroad has grown into a thriving platform that sends millions of dollars to creators every month.

In 2020 alone, we sent over $140 million to our creators, up 87% from the previous year. This success has reaffirmed my belief in the principles of minimalist entrepreneurship—building sustainable, profitable businesses that make a real difference in people's lives.

It's incredibly fulfilling to see the positive impact Gumroad has on the lives of so many creators, helping them turn their passions into livelihoods.

Is there anyone you would like to tell about their failure?

I'd love to hear the perspectives of a few inspiring entrepreneurs and creators on these questions. Here are a few names that come to mind Laura Roeder (Founder of MeetEdgar), Nathan Barry (Founder of ConvertKit), Jason Fried (Co-founder of Basecamp), Courtland Allen (Founder of Indie Hackers), Ben Chestnut (Co-founder of Mailchimp) and Anne-Laure Le Cunff (Founder of Ness Labs).

Hearing from these entrepreneurs and creators about their journeys, challenges, and lessons learned would be incredibly enriching and inspiring for anyone looking to build a sustainable, impactful business.