Vic Koch

Year after year, there is less and less doubt that we are part of the big game. The stock market, venture industry and the financial system is like a game of squid where the rules are set by a select few. What have you had to sacrifice to stay in this game longer?

First of all, I m glad to post my first article regarding this thread. One of the reasons why I couldn t write about it is a non-disclosure agreement that limited my actions to 10 years. So back to the topic, today I m 35 years old and behind my back almost 18 years of experience in creating startups. I started programming at the age of 7 thanks to my schoolmate whose father worked at a programming research university. The first $25K at 16 I earned on the sale of a site for the phone resale and computer equipment it was a tone of money for me. Then I moved quickly and already after 3 years my engineering skill was really serious. The HR-G team regularly updated my resume before I started working on G-products as an engineer, but much earlier I started a company called Slinky (Summary Link of Y). I had no idea what could be the big story in that period. The idea was simple, like 1+1, easy peasy. We put together a semantic search engine for graphic animation files and added markup tags for each file just like the Google engine did for websites. Many may say that the same Giphy did it. The answer is -yep, but years later. I m talking about 2010 and 2011. I can t claim that the founder of Giphy copied us or just caught the same idea later than us. BTW, as I know he worked at Google too. The time-gap between us and them was almost 2.5 years. In addition, our main popularity was in Japan, South Korea and Eastern Europe. For this reason, I bought a premium domain (slinky asia) from a Japanese juice company to expand our presence ($18K). One way or another, for a while, I worked on Google products and also on my own startup. Of course, I did not violate the corporate agreements/culture, because the company preferred to add me to the team as an external developer. It was convenient not only for me, but also for them, because under (the terms of the typical) job-contract, all intellectual property could belong only to Google. Everything was calm until my startup began to grow fast as hell. We increased the number of products and features. We ve released several themes for the Google browser. You can get them here https://chrome.google.com/websto... Years later they are still popular. These were some of the first browser themes. They are still popular today (more than 1.5M users). In some way, I changed how everyone s familiar browser looks. I ve repeatedly asked the company s management to allow users to change themes for the browser, because this functionality would allow people to customize the window to the Internet as they want. After another six months, we broke the wall and even achieved cooperation with G. In fact, we were afraid that we would be thrown out of the game. Everything went on until a flurry of criticism fell upon us. We ve been hit by the biggest attack by Chinese hackers who found a breach in our servers and got video of the first laptop from Google (ChromeBook). Almost all the well-known US-media wrote about this incident, and it almost destroyed us. 99% of sources pushed something that never happened or made up a scandal in order to make as much money as possible from all this. Our capitalization was disappearing rapidly day by day as the scandal went viral. Before the scandal, we were valued at $85M (for those years it was really a lot), then almost $3 5M. Clients left us and advertisers stopped paying us for our platform. We received advice from Google lawyers and many others. I spent almost $230 250K on lawyers. The lawyers advised me that I should not react and not answer anything. Sergey Brin and several other company executives were mentioned in the conflict, so I accepted categorical silence and understood that my startup was dying. In addition to the main direction of the scandal, my case became high-profile for an investigation that lasted almost a year. At the moment, I still can t reveal some of the details as requested by several parties (despite the interval of 10 years). Some clauses of the non-disclosure agreement have a validity period of 100 years. What happened next? After a while, I started negotiations so that we would join a lot of well-known companies, but I got rejection after rejection. No one in the US wanted to buy us for fair money, although until recently we were loved by everyone in the valley. On the one hand, nothing has changed; on the other hand, our company was destroyed by this scandal. After 8 months of intensive negotiations, a large Chinese search company [NASDAQ:SOHU] bought our intellectual property, R&D stuff, part of our team and everything that could compete with Baidu. This is how I got $2.2M. Luckily it didn t break me and I m still making amazing products. Unfortunately, I can't insert images here, so for those who liked my failure story, you can find photos and other links via G. Thanks

Anticipating the haters who, without reading to the end, will say that stories like this are common not big deal in Silicon Valley. Rapid growth & rapid decline occurs every day, but in fact this is an illusory impression because the most valued media does not cover 99% of startups and projects. This content is not intended to discredit companies like (Meta Inc. and etc.) and those persons or sources that will be mentioned in this article. This story is a great example of hard work, frustration and learning from mistakes. This content does not violate any non-disclosure agreement. First of all, this was not my first startup and not my first experience in entrepreneurship. Prior to starting Stickeroid, I had more than 10 years of programming experience and several successful exits (Slinky acquired by SOHU [NASDAQ:SOHU] in 2013. Actually Stickeroid was my 5th startup and at that moment I didn t even think that another project that was created in parallel would also be a target for M&A (Teleport PhotoEditor acq-hired by [NASDAQ:SNAP]). -Why? The main reason and inspiration are based on the analysis of industry trends and the experience of previous mistakes. In one form or another, I tested a dozen hypotheses before I started R&D cycle. One thing I knew for sure was that millions of people needed a way to express themselves in instant messengers, not only through text, but also through images. Thanks to our experience of working on VoxImplant aka Zingaya Inc. (European competitor of Twilio) my partner and I started to develop a solution that could be integrated into any product in less than 5 minutes via API. The CPaaS model was the initial driver of success; at that moment it was a revolutionary strategic decision. We were the early adopters who realized the potential of generative content and power of neural networks (ML). The number of integrations increased. We quickly went through over 8-10 integrations and our dataset grew from 500 images to 25,000 + added 2 languages. I worked a minimum of 16 hours every day to maintain a fast development phase while our team was only 14 employees. - The only thing that brought joy in those days was new amazing people around me, attention from famous celebs and our geometric crazy-growth - Extreme growth outside the US Unfortunately, due to a number of reasons, our platform was popular outside the US (in W/Eastern Europe, China, Japan and India). This factor destroyed my perfectionism every day. The desire to succeed in the US was a manic desire to show the users that we had done something unique, extra-special and superior to everyone else. Over time, we developed generated-templates and sticker-AI-FX for photos. This is something that would seem to become viral in the US and could bring us victory. As you already understand, this has not brought us any progress in globalization - Peak phase. Success is Intoxicating. When we watch movies or read any success stories, we rarely think about the cost of that moment. Most people think and believe that it s just a matter of chance (kind of luck you know). The price of our growth was that I quickly spent my savings on scaling this business, aggressively-forced people to work as much as possible and draining my health with the insane pace of work. In total I invested ~$485,000 of my savings and raised ~$300K (friends & family capital) to reach those goals. The main reason why I did not raise funds from venture firms is the belief that we can achieve any level with cash flow. I always think of venture capital as the tail end of the line, not the upstream end. The main goal is unit-economy + strategy + clients, not negotiations with funds. Experience and focus on details allowed us to create something special from scratch. Of course, many funds pinged us and wanted to invest in us, but they all only wanted to see growth in the US, not in India, China or W-Eastern Europe. I ll be honest, venture capital firms are not as wise as many people think, they are not immersed in business processes, so they often make mistakes. - Houston, we ve had a problem here. After more than a year of intensive work, our team has turned from a friendly family into an inferno-place of conflict. Unfortunately, even the friendliest team can t work so intensively. One way or another, I m sure everyone was tired of working almost seven days a week. The number of integrations has become truly impressive: Kik messenger, Discord Bot, Slack, QQ, Weibo, Microsoft Teams (pilot), FreshChat (FreshWorks), Twitch, Google Chrome via Extension, Google Slides/Docs via cloud apps, LiveChat, Trello and etc. Our expenses grew extremely quickly. All attempts to make the business model efficient hit the growth rate, which negatively affected on our results of operation. All my worries and fears became reality. - 3 quarters until we run out Due to declining engagement rates, I made the decision to cut marketing costs and focus all my energy on sales. At first, the strategy showed good results, but for venture capital firms and investors this result was unacceptable. From a fast-growing startup that grew hundreds of times from scratch, we have decreased in growth to 85% YoY. Too slow after hype , user retention is declining , please keep us updated , It seems like your growth pattern is broken , you should probably find a way to monetize and increase growth and etc. Venture capital firms refused to invest in us, partly because I grew the company with my own funds. They all said the same thing. Among other things, they could not valued us fairly due to the lack of any rounds. I remember the words of one of the partners who said that my parents are probably wealthy people, so it s easier for me to ask them. - M&A cycle: Google, Facebook, Twitter, ByteDance, Baidu, Weibo, and Amazon If we can t raise necessary capital at this time, then we need to continue our mission within a larger company. This is exactly the strategy I chose before our funds completely ran out. I started negotiations with all companies, primarily with our clients. Most companies couldn t move as quickly as we needed, they needed at least 3 4 months or even more. - Instant response from Meta It s hard to describe the feeling when you receive confirmation from Facebook Inc. that they are interested in considering this deal. Fortunately, I met Mark Zuckerberg in 2015. He attended a conference in Barcelona, where I was able to communicate with him and shared contact. In addition to interest from Facebook, we received interest from at least 7 different companies with different offers. Certainly, no proposal was comparable to those discussed with Zuck s team. - Week after week. About 6 weeks passed, but we were still in the most risky position as before. Our valuation was reduced several times, but even this revision did not guarantee that the transaction would be completed soon. The corporate M&A team did not give us the confidence to stop bidding with other potential buyers. They didn t like the fact that we were in negotiations with almost a dozen players at once. A few more weeks later, I decided to txt Mark directly that we can t spend another quarter on discussions and we need to make a choice already. Unfortunately, he received this message emotionally incorrect. For one reason or another (including NDA) I can t post screenshots that I received from the Facebook team, but our deal was broken. - What happened next? Depression? Apathy? Insomnia? Frustration? Everything is true From among potential buyers, we received only one quick confirmation, which left us no choice. For several years I considered my choice a mistake, but only recently realized that it was the right choice. Of course, I didn t earn a lot of money as expected. I don t regret my mistakes and have accepted them as part of my past. Our work continues to live. Our work remains in a small piece of history, albeit not for a billion people, but for those millions who are now using LINE products. I know many may read this and draw the wrong conclusions. I know that people mostly only like stories that always end well, but the main thing is what we can do today, tomorrow and leave behind.