Sahil’s Second Act

Sahil Lavingia is enjoying his second act. (Mostly.)

Back in 2011, when he was employee #2 at Pinterest, he had an idea for “a sort of link shortener with a payment system built-in.” So he hacked it together over the weekend and launched on Hacker News that Monday. He called it “Gumroad.”

A few months later, Sahil left his job—leaving all his Pinterest stock on the table—and raised $1m from top Silicon Valley investors. Then he raised $7m more. He hired a team of 20 people, leased a fancy $25k/mo office in SoMa, and poured everything he had into making Gumroad his life’s work.

They hustled to attract a wide variety of creators to sell digital goods through their platform: musicians, movie studios, designers, writers, programmers. They hit a peak of nearly $2m in gross volume in 2014.

Then, in 2015, the growth stalled. The company started running out of cash, and it became clear that VCs weren’t coming to the rescue. In fact, they wanted Sahil to shut down the company and try something new-they even offered him money to do it. But he couldn’t:

“We helped thousands of creators get paid every month. About $2,500,000 was going straight into the pockets of creators — for rent checks and mortgages, for student loans and kids’ college funds. And it was only growing! Could I really just turn that faucet off?”

He couldn’t. So he laid off all but 5 employees. They stumbled along for a bit, but as time went on the remaining five all eventually left for more exciting opportunities.

“I was basically alone.”

With Gumroad scaled back to the bare minimum, Sahil moved to Utah and learned to paint. He worked on sci-fi novels. And in his spare time, he answered support emails and fixed bugs to keep Gumroad afloat.

But there was a silver lining: Gumroad was finally profitable. Which meant he wouldn’t have to raise any more venture capital, which in turn meant he could run the business however he wanted. He didn’t have to play the VC game anymore.

Fast forward to 2019. Sahil published an essay that changed everything: “Reflecting on My Failure to Build a Billion-Dollar Company.” In it, he told the full story of Gumroad for the first time.

“The reception has just been kind of insane,” he told me. Over 700k people read the post. And now Gumroad is growing faster than ever.

These days, Sahil isn’t alone anymore. He has a small team again, and they’ve got big plans for 2020.

How he feels about Gumroad today 

You know, in some ways, the growth is kind of annoying. It’s stressful!

I had gotten used to Gumroad as sort of flat, and now it’s growing faster than ever. Every month we grow, all I can think about is “fuck, what if this is it?” I don’t have the confidence yet to say that this is the new normal.

I would say I’m cautiously optimistic. I’m at least more patient now than I used to be. Plus, we’re profitable, so I can afford to be patient. It takes a long time to build a really great product.

The origin of the idea

It was a Friday night, and I was at home designing a pencil icon for a Mac app I was building.  

After I was done designing it, I realized that I wasn’t going to build the app. But the pencil icon was pretty cool! So I thought maybe I should sell it online.