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Lost and Founder: A book every startup employee should read

Lost and Founder: A book every startup employee should read

A first hand recount of a founders journey through the startup jungle

I read a lot of non-fiction business books. Every once in a while, I come across one that I really, really like. Lost and Founder, the story of Moz as recounted by founder Rand Fishkin, is one of those few. It’s a book that every single startup employee needs to read. But, if you’re lazy, I’m here to help with a few important takeaways.

Before I begin, I have to admit that I am predisposed to like this book for a couple of reasons.

First, I am an enormous fan of Moz, and using it’s keyword research tools have built this blog from an infrequently visited backwater, to a significantly less infrequently visited backwater. All in less than two years!

Second. I am a huge fan of Rand, as he has not only built a valuable and useful product that I use on a daily basis, he has also contributed enormously to the startup scene in my beloved hometown of Seattle.

Third, he is a genuinely decent human being, and reading this book was a bit of a relief after some of the other autobiographical founder books I have read recently. It’s easy to be full of yourself when you have accomplished a lot. Rand is quite humble, or he makes a good show of trying to be. Either way!

Lost and Founder Lesson #1: Startup success is fickle

Moz has had a hell of a ride. For those of you who don’t know, it’s a SaaS tool for marketers, specifically search marketers. There is an entire industry of tools dedicated to helping people rank higher on Google by discovering the things that people are searching for and the most efficient ways of creating content that might catch their attention. Moz was one of the first tools to enable people to do this.

Originally, Moz was actually an all purpose marketing agency that was helping their clients with search marketing. Along the way, they developed their own in-house tools to help themselves, and eventually discovered that they could sell those tools to their fellow marketers and create a sustainable stream of income. Best of all, unlike their client work, that income stream had leverage. No matter how many customers signed up, the cost to maintain and create the service was essentially the same. As you might imagine, Moz eventually dropped the consulting business.

Over the years, they developed other search marketing products, expanded, and secured venture funding as well. Although they have had a great deal of success in their chosen market, Moz is not what you would call a runaway success in the startup world. They are not a unicorn. They have gone through several rounds of layoffs and expansions over the years. They have had products that failed miserably.

Through the challenges they have persisted and have built an enormously loyal customer base and a business worth at least $200m. The craziest part of the entire book, and a point that Rand frequently makes, is that a $200m business is not really that successful in the insane world of startups that we live in today. Still, Moz has been more successful than 90% of venture backed businesses and that is an enormous accomplishment.

Lost and Founder Lesson #2: Venture capital is more dangerous than it seems

Moz bootstrapped for 4-5 years before taking on a modest series A of $1.1m. For a small startup, this was a seminal moment. As Rand retells it, for him it felt like the start of a bright new chapter. All of the doors would be open to them! Their investors were involved and interested in the business, making a point to fly up for every board meeting and helping to develop connections between Rand and potential clients or partners.

Over time, this involvement melted away. Moz had some troublesome product launches and saw their growth rate taper from a torrid 100% per year to less than 20%. There were layoffs. And, although Rand doesn’t talk to it too much, the truth is that the rest of the startup market started heating up, making Moz seem less important amidst a sea of potential unicorns. Their investors started phoning in the board meetings, then not attending at all.

Moz was still growing, and still had plenty of potential, but their VC’s weren’t interested. Why? The simple truth is that the enormous venture capital funds that are being raised these days will make hundreds of investments, but they will succeed or fail on the backs of 4-5 unicorns.

Even a relatively modest $100m fund would need to see at least a 10x return on their $1m investment in Moz to be anywhere near interested. More than likely, they would look for a 20-100x return before they were truly interested in the business.

VCs know that most of their businesses will fail, with a couple of neutral to 2x returns, and a very small number of home runs. Experience and logic dictate that they spend the majority of their time on the home runs. For businesses like Moz who are “meh” to VCs, the tradeoff to take venture capital can be more than the money is worth. Rand repeatedly states that he would bootstrap if he had to do it over again.

Food for fucking thought…

Lost and Founder Lesson #3: Being a founder kinda sucks

Living in San Francisco, the dream is unanimous. Everyone wants to be a founder! To run their own ship and develop their own story.

Although I can certainly understand the desire to run my own business (and indeed intend to do so at some point), being a startup founder is plagued with difficult decisions and truly dicey odds. In addition to the aforementioned struggles with venture capital, Rand frequently describes the experience and troubles he had having to:

  • Lay off employees

  • Make challenging product decisions that would negatively affect customers

  • Manage the egos of managers within the company

  • Deal with negative PR and response to new product launches

  • Finance the business during difficult times (his credit has yet to recover from earlier challenges…)

What’s more (and here’s the real kicker for 95% of those who want to be a founder “for the wrong reasons”)…. the money really isn’t that good. Yes, he makes $200k a year… but so do even mid-range engineers or managers at Google/Apple/Facebook/Amazon. He has yet to see a dime from his ownership percentage in Moz, and he has no idea when he will. He rents. Yes, he owns stock that is ostensibly worth millions, but it doesn’t matter until they exit. Even then, his 15 years of hustle and grind will likely amount to $5-$10m.

You might be looking at me and thinking, “That’s a fuck ton of money!” It absolutely is, I completely agree. Rands point (and I am struggling to come up with a counterpoint) is that he could have made just as much, with 5% of the stress, working for some other tech company. Had he started at Google in 2005-2008 in a mid-level role and moved up the ladder with some speed, he could have more than matched that number. Remember, Google stock has 10x since the mid-2000’s, and Rand is clearly a pretty smart guy. It’s also important to return to the indisputable fact: he has yet to see a dime from his ownership in Moz. It’s all theory, at this point.

The last thing? Even though he has built this incredible business, throughout the book you can feel a weighing sadness. The startup world rewards the unicorns and denigrates everyone else. Although Rand has had great success, built an enormous community, and developed countless friends and allys, the VC world still views him as an also-ran. They probably always will.

Fortunately, the world is greater than just VCs, and I can say that as a marketer the affect that Moz has had on me is enormously positive and meaningful. I also look with admiration at the charitable and community efforts Rand has stood behind over the years. Rand, if for some reason you read this, thanks for the great read and for your efforts to make a positive “dent” in the universe. I think you have been very successful. Fuck the VCs!


This is a fantastic book, and you should go read the whole thing. Here is a link to it on Amazon.

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