I Was Supposed to Be a Millionaire at 25… Instead, I Went Bankrupt.
Startups are supposed to be about an innate drive to change the world.
But not for me.
I’m 22 and I have one goal: become insanely rich.
That’s my mindset in 2014 as my co-founder Lee Silverstone and I start Gymtrack, a startup that lets gym members automatically track their workouts. It’s Peloton for the gym. It’s “The Future of Fitness.” It’s cheesy, but it works.
A few months in, Dave McClure hand-picks our tiny Ottawa-based startup to be part of 500 Startups, his famous accelerator in SF. Before the accelerator starts, we raise $500K, more than any other company there.
Everything is right on track. I’m going to be the next Steve Jobs. The next Mark Zuckerberg.
After demo day, we get a call from a European gym equipment manufacturer. (An NDA prevents me from naming them, so let’s call them EquipFit.) They love our vision. They want to lead our seed round. But we’d already signed a term sheet with a VC. We were through due diligence and didn’t want to derail the round. So we tell EquipFit we can’t take their money.
But they keep pushing. They send their head of M&A across the world from Europe to Ottawa. He takes us to dinner. He tells us they’ll skip diligence and copy the exact terms the VCs offered us. And, if we prefer, they’ll even add a $250K secondary for each of us.
A minute ago, I was a broke student. Now I’m offered $250K cash, no questions asked.
But we dismiss the secondary without blinking. I’m a 23-year-old who doesn’t know how to spell hardware. We get offered what in the startup world is considered trivial but in the real world is more than what 99% of 50-year-olds make in a year. $250K in cash for shares of an idea. And without thought, we say no.
We’re the next Steve Jobs, the next Mark Zuckerberg. They wouldn’t sell their shares so early. So why would we?
A month after closing our VC-led seed round, we get another call. EquipFit still wants to invest. They tell us since they missed our seed round, they’ll lead our A. Just one month after closing our seed round, we have a Series A lead.
We’re right on track.
This time, they invite us to fly across the world to Europe. The night before the big meeting, Lee and I spend hours practicing how we would negotiate our Series A valuation. Our initial ask would be high: $25M pre-money valuation. Considering we’d just raised a month earlier at $6.65M post-money, it was also absurd. We go back and forth on every single possible tangent we can imagine. If they say X, we say Y. But what if they say Z? And so on. For hours. We were excited. But more than anything, we were nervous. Closing this round meant everything to us.
I didn’t sleep for one second that night.
At 9 am, we get to their mini-Google-like headquarters in a small village in Europe. We sit down at reception and wait. And wait. And wait… Is this a negotiation tactic? Maybe. Finally, at 10 am, the head of M&A comes to get us. We do a 2-hour tour of their offices. Cool chairs. Ping-pong tables (none being used, of course). Nice cafeteria. At 1 pm, we get into a room. Their CEO and CFO walk in.
The game begins.
Normal Series A negotiations aren’t all that exciting. Someone makes an offer and the other party counters. If the founder has other bids, maybe there’s a minor bidding war. But this was not normal.
“Look, we just raised. We don’t need the money. Our goal is to raise a Series A in 12–18 months at $25M pre-money. If you want to invest now, great. But it’ll have to be at $25M pre-money.”
They tell us we’re crazy and open at an $8M valuation.
Here’s the problem with early-stage valuations: they’re based on nothing, especially when the company is pre-revenue and pre-product. There is nothing to negotiate. Nothing to give and take. No meaningful arguments can be made to close the gap.
It’s a battle of wills.
We say a number and “defend” it. They discuss it and say a number back. Then they ask to break for 30 minutes. We go into separate rooms and come back to discuss again. We go for hours and hours negotiating back and forth. If this were a scene in a movie, I’d call it unrealistic.
But this is real.
After many hours of discussion, they reached $12M, and we were at $14M. The billionaire founder of this company is standing across the table from me, a kid.
“Listen, I’ll be honest (I wasn’t). The lowest I can go is $13.3M. That’s 2x our last valuation and it’s the absolute lowest the VCs will let us go.”
Thinking we were the next Steve Jobs gave us real, imaginary confidence. I stared at him in the eyes and put my hand out like we were on Shark Tank.
And it worked — he shook my hand.
$8M Series A locked in from one of the largest gym equipment manufacturers in the world — just 14 months from incorporation.
I’ll never forget the feeling right after that meeting. Lee and I are in the rental car, elated. I’m many espressos in and running on no sleep. I’m barely awake. The whole situation is surreal. Are we living in a movie? Did this really just happen? Am I the next Steve Jobs?
We’re right on track.
Once we’re back in Ottawa, negotiations quickly break down. EquipFit asks for several control terms, including some that our VCs would not accept. We wanted the money, we wanted the partnership, and, perhaps most of all, we wanted the hype. We try to convince our investors to go for it, but it won’t fly. So, instead, we go back with a counter.
“If you want to control this company, you’ll have to buy it.”
Our “startup” was still more in our heads than in reality. We had a team, we’d built an alpha, but we had no customers. The product was not ready. It was not worth $14M. A few weeks later, EquipFit calls us: they’ll buy our company for $14M, all cash.
It takes us months just to get the new term sheet signed. They send several members of their team for in-person due diligence. We move to the final contract, back and forth with legal. We work out an employment agreement. I’m about to get $1.7M at signing, $200K per year in salary, a $1M bonus in 3 years and still own shares of the company. I’m buying Teslas and condos in my head.
I’m 24 years old. I’ve made it.
But then I worry. It feels too easy, too good to be true. So, just for a sanity check, I check in with our lawyer, who’s seen 100s of deals.
“Shane, how many deals make it this far and fall through?”
“99% of deals that get to this stage close.” Great, we’re golden.
Except, as it turns out, we weren’t golden.
We were the 1%.
We were burning $250K per month with only $1M in the bank. We’d kept things up to avoid looking weak during negotiations. But the jig was up. EquipFit called and told me they were out. We’d negotiated a break fee to prevent exactly this from happening. EquipFit wasn’t supposed to be able to pull out unless they had one of the few negotiated reasons. But, then again, as a startup running out of cash, what are you going to do…sue them? They laid out several reasons, and none of them mattered.
The thought of laying off 66% of the team we’d fought so hard to hire was too much to stomach. Did I go from multi-millionaire to bankrupt in one phone call? The dream was dead. At first, I was pissed. Then, I was sad.
Then I bawled like a little kid whose candy got taken away.
This is what they mean when they call startups roller coasters. The highest of highest, the lowest of lows. All it took was one phone call. We kept going for two years after that. We tried several new pivots. We hired a new CEO. But the air had been sucked out of the balloon.
Gymtrack died on that day.
A few months ago, I met the founder and CEO of PUSH. I’d known of PUSH since we started Gymtrack. Same space, same vintage. Back then, I dismissed them as niche. They went after pro sports and university teams, not mainstream users. They measured specialized metrics that only mattered to serious athletes. Unlike us, they could never be a unicorn.
But as he took me through his story, I realized he’d done it right. He had bootstrapped his way to success by starting with a smaller market. He wanted to build a product for the masses, but he started by selling B2B to sports teams. The capital requirements were lower, and the customer value was clearer. When investor sentiment for wearables turned, as it often does, he still had a business he could drive forward.
Instead of chasing hype, he built a company. Instead of chasing unicorns, he delivered real value. You might not think he’s changed the world, but–from his customers’ perspective–he did. He had real traction, real impact, and now, a real exit.
He’s an actual millionaire — not just an imaginary one.
Founders are told to dream big, build massive companies, and swing for the fences. But it’s VCs like me who sell those dreams. I win when all my portfolio companies swing for the fences — even if only a few make it. But if you put all your eggs in one basket, you better watch that basket.
Could the Gymtrack exit have closed? Maybe, and then I’d be writing a different story. But a strategy isn’t based on hope. It’s based on reality, on probabilities. And while anecdotal evidence tells us massive companies are built by young founders like Steve Jobs or Mark Zuckerberg, data tells us otherwise. What’s the number one most common difference between founders of seed-stage startups and founders of billion-dollar startups? Founders of billion-dollar startups have previously founded a successful startup.
Like everything else in the world, practice matters.
Sometimes, the biggest one is your first one. If that’s you, great. But at the outset, your goal with your first one should be to get a win — hopefully, a big win — but at least a win. And your odds of getting a win are much higher when you focus on value vs. hype, when you focus on customers vs. TAM, and when you focus on building vs. pitching.
I’ll leave you with three observations:
- They might take away my venture capital license for saying this, but if I were to do it all over again, I would lower my ambitions. I would aim to create a startup with real traction. I wouldn’t worry about hype. I wouldn’t worry about the billion-dollar story or the massive TAM. I’d worry about delivering real value to customers. Maybe it caps at $1M in revenue, maybe $10M. If I’m lucky, maybe it goes further. But at least it works. At least it makes real cash, not paper gains and headlines. At least, for my customers, it changes the world.
- When they say startups are roller coasters, they mean it. Startups aren’t just hard; they’re emotionally taxing. I’d say be prepared, but nothing prepares you. Just know even the rocket ships feel like roller coasters from the inside. What you build is hyper-fragile. You’re often one employee, one customer or one investor away from success– and from death. It’s what you sign up for. And the more hype you build, the bigger the unicorn you chase, the more this is amplified.
- There is no substitute — none — for solving real customer problems. No smoke and mirrors, no massive round, no PR and no hype will save you if you’re not solving a top-of-mind problem for your customers. It could be 10 customers or 10,000. But if you ask your customers if you solve their #1 or #2 problem, their answer needs to be “Yes”.
Listen to more founder stories on our podcast: The Product Market Fit Show
Pablo Srugo is a Partner at Mistral, a seed-stage firm. Prior to that, Pablo founded two startups. He is the host of The Product Market Fit Show, a podcast that helps 0 to 1 founders find product-market fit. He’s interviewed 50+ late-stage founders, helped 100s of idea-stage startups and heard 1000s of startup pitches.
