Affordit: A VC-Backed Unicorn-In-The-Making That Didn’t Become One—and What I Learned
Overview
This article shares a detailed, behind-the-scenes look at a startup failure I experienced, using Affordit as the case study. It’s written to help fellow founders compare notes, ask questions, and learn from a high-profile setback.
Background
I’m a 9x founder with five exits across a 31-year career. My current focus is helping other founders navigate disasters, drawing on both my own experiences and those of many other founders I’ve supported through tough times.
The Concept
In 2006, I launched Affordit, a concept built around a simple weekly payment plan for everyday e-commerce purchases. Imagine buying devices like video game consoles in weekly installments. In practice, this was an early version of what later became popular with services like Affirm or Klarna. It was an outstanding idea, but I made critical missteps that undermined it.
The Funding
Initially, the plan was to self-fund, but after relocating to Los Angeles from Ohio, I encountered several angels and early-stage investors who would become part of Silicon Beach’s early ecosystem. Notable names—Mike Jones, Mark Suster, Dave McClure—were unexpectedly supportive, often offering to invest after brief conversations. This momentum led to a seed round from established firms including Bessemer Venture Partners, Founders Fund, and Crosscut Ventures, totaling about $1.2 million. At the time, that felt like a huge validation and a sign of something bigger to come.
The Business
The core idea—selling Xboxes for $19 per week—generated immediate traction. In the first month, we moved roughly $500,000 worth of Xboxes through a lean operation, even with modest paid advertising. This level of early sales attracted significant investor attention and a flood of speaking invitations and media interest. We were positioned as a rising star in the fintech/consumer financing space.
The Market
Then the markets shifted dramatically. The 2007–2008 financial crisis, sparked in part by Lehman Brothers’ collapse, transformed perceptions of fintech and high-interest consumer finance. Overnight, funding dried up: term sheets were pulled, and I found myself financing operations personally after the seed capital was exhausted. This misalignment between the fundraising reality and the company’s runway created a perilous financial gap.
The Model
As payments accumulated weekly, a new challenge emerged: the very customers who benefited most from our model often lacked the means to sustain weekly payments. Our primary customer archetype turned out to be single mothers buying presents for their children during holiday periods. This demographic reality created a difficult contradiction: a mission to help families while facing significant collection and profitability hurdles.
The Wind Down
The eventual decline was painful and highly public, despite prior success. The experience was a harsh lesson in humility, public scrutiny, and personal cost. After more than a year and a half of attempts to revive the business, the effort did not succeed. The emotional toll—embarrassment, frustration, and a sense of personal failure—was real, but it did not define the entire arc of my career.
Key Takeaways
– Team and funding dynamics can shift rapidly in the wake of a market downturn. Even strong early momentum doesn’t guarantee long-term viability.
– Founder burnout can occur when a company fights to avoid failure rather than pursue growth. The goal should be to pursue viable success, not merely to avoid collapse.
– The fear of shutting down a venture can drive costly decision-making and extended efforts that don’t serve the business or the people involved.
– Sometimes, the most painful moments are also the most instructive. Recovery often begins when you acknowledge the reality of the situation, learn from it, and move forward with a clearer purpose.
Where I am now
Today, seventeen years later, that failure is a relatively small footnote in a much larger career and life story. The experience shape-shifted my approach to leadership, investment, and founder support. The memories remain, but they no longer define my present—family, career, and personal growth have for years taken primacy.
Final reflection
Losses are part of entrepreneurship. The real measure is how you respond afterward: what you learn, how you adapt, and how you apply those lessons to future ventures. If you’re navigating a setback in your startup, use it to inform a smarter path forward rather than letting it dictate your identity or future.
If you’d like to discuss any specific aspects of this experience, such as fundraising strategies, market timing, or customer economics, I’m happy to answer questions and share additional insights.
