Money is to a business like oxygen is to our bodies.
Everything else can be going right: you could be in amazing shape, drink plenty of water, eat nutritional food, the total package.
But take oxygen away from the equation, and nothing else matters. You’re done for.
It sounds like an obvious enough concept to grasp, right? Who wouldn’t understand that?
But it took me a hard failure to really drive home this message.
Before CrewFire and SimpleCrew, around my Junior year of college, I started an online magazine called Headstash.com, covering jam bands, electronic music, and music festivals.
Together with my buddies Andrew and Brandon, we’d started Headstash just because it was the music scene we loved, and we thought it’d be fun to build something
It ended up being one hell of a ride.
Over the course of 3 years, we grew Headstash into a cool brand with an awesome team, great content, and hundreds of thousands of monthly pageviews.
And the cherry on top, we had access to all our favorite artists, music festivals, PR firms, management companies, etc. It was tons of fun.
We were respected in the industry, and our reputation preceded us – Headstash became popular on the far flung music festivals and concert tours we’d travel to, and people we’d never met would recognize us or our brand.
It was glorious. Headstash was growing quickly in popularity, more and more people were visiting the site every month, and the industry was taking notice.
At 21 or 22, nothing could have been more exciting.
But just below the surface, we hid a dirty little secret:
We weren’t a real business.
When we started Headstash in 2009, we were just a couple college kids with no experiences or mindset that trained us to think about money.
Naively, I even trumpeted this up as a competitive advantage:
Do you expect to make money on this, and is it the entrepreneurial spirit that brought you to this point, or is it just the love of the music, and you don’t really care if you make any money?
Alan: We were just talking about the kind of luxury we have where we’re not pressured to make this a business in any way. It’s got the luxury right now of not being anybody’s support – maybe one day. We’re all working on this, we don’t have outside investors so we’re not pressured for profit right now.
…We do see that kind of potential and we’re obviously excited for that, but we’re also just enjoying it. We know people who are working on entrepreneurial projects right now that they’re doing for profit, and it’s a very hard pressure to be in. Headstash has the benefit of not.
Anyways, after graduation, the three Headstash partners (myself, Andrew, and our friend Nick we brought on to manage content) were all living in New York City.
Only one of us, Andrew, had a real job. That left Nick and I with Headstash as our sole source of income for some time.
The problem was, at our peak, we were only pulling in a couple thousand dollars a month. Not nearly enough to fund operations while paying ourselves enough to live off of (in New York City, of all places).
It turns out it’s really hard to monetize a jam band magazine with ads. There just isn’t a big demand for ads, and not much money in it to begin with.
As the financial situation became more urgent, we tried different things: sponsored listings on top of our popular festival guide, merchandise sales at music festivals, an apparel collaboration with a popular hat company in the scene.
Everything else was going great: we had a great brand, great content, great people, and plenty of traffic.
But we didn’t have cashflow. The body was starved of oxygen, and nothing else mattered.
Before long, small problems became big problems. Small issues between the partners were magnified and intensified into major disagreements.
In the Fall of 2012, after a 2.5 year run, Headstash grinded to a halt following a fallout between the core team.
It was a particularly tough lesson to learn.
For 2.5 years, Headstash was a key part of my identity. To whole swaths of my network, I was “Alan from Headstash.”
It was what I was known for, and where I derived a lot of my personal sense of value.
When Headstash ended, all that was scratched from the record, and the project that had grown into the most significant thing in my life over the course of 2.5 years came to an abrupt end.
It was tough.
With that key pillar of my identity removed, I went through a period of not being sure who I was, or what I was worth.
Worse, it felt like a public failure. My friends and acquaintances would ask what happened, and I had no good answers. I felt like a disappointment and a failure
It took a while, but over time, I was able to rebuild my identity and regained enough confidence to start thinking about what to do next.
And there, in thinking about the future, I realized that as hard of a pill as it was to swallow, my failure with Headstash really drove home a key lesson:
If I was ever going to try my hand at another project, whatever I did, it would have to have a crystal-clear path to revenue and profit.
Headstash had so many things going for it on the surface, but without cashflow to keep the heart of the business pumping, the body eventually gave in.
With my future projects, things would be different.
As Basecamp partner DHH championed in a video that deeply influenced my business mentality, I decided that I was going to make a product for one customer base, and charge them for it.
No more publications. No more ads. No more “free”.
Today, I’m able to look back fondly on the years I spent building Headstash with my friends.
It was an incredible experience, and though it met an unfortunate end, the business lessons it taught me are baked into the DNA of all my products today.
Most importantly: think critically about how your business will make money, and make that path as simple and clear as possible.
Because like oxygen to our bodies, if that’s not in place, nothing else will matter.