I had a VC-funded unicorn-in-the-making and I messed it up—here’s how

In 2006 I founded a company called Affordit which was designed to create a simple weekly payment program out of everyday e-commerce purchases. Think “Xboxes for $19 per week.” Yes, it’s almost exactly what Affirm/Klarna is today, but this was before them (you can be too early…).

It was a phenomenal business idea that I completely f—ed up. Here’s how it all went down.

The funding

Initially I planned on self-funding the business (I had some exits before this), but upon moving to Los Angeles from Ohio, I started to meet some angels and VCs, all of whom would later form the foundation of what we know of now as “Silicon Beach” (the Los Angeles version of Silicon Valley). Many of the most prominent at the time—Mark Suster (now Upfront Ventures), Mike Jones (now Science, Inc), Dave McClure (previously with 500 Startups, now called 500 Global)—were incredibly supportive and provided the very first bit of startup capital, many out of their own pockets.

I want to pause there. The meetings with these investors didn’t go kinda well—they went un-f—ing believably well. This has never happened to me since, and I do this for a living. When I met Mike Jones for the first time, I wasn’t even looking for capital, and he said, “How can I invest?” The next day, he introduced me to Mark Suster, who said, “How can I invest?” Suster then got me connected to Kamran Pourzanjani (founder of PriceGrabber, sold for $300 million), who asked, “How can I invest?”

You have to understand: I hadn’t met any of these people before and they were offering me checks immediately—and they were all ballers in their own right. I was blown away, and apparently, I was fundraising.

That led to a round from Bessemer, Founder’s Fund, and Crosscut Ventures—all great firms. It was a “big seed” back then at $1.2 million, which is peanuts these days. But at the time, we had the most prominent angels around and we were “the company.” That would be as good as it would ever get.

The business

It turns out when you sell Xboxes for $19 per week, people want them. A lot of them. We sold $500,000 worth of Xboxes in our first month with a tiny AdWords campaign. Did we own $500,000 worth of Xboxes? Absolutely not. We were driving around town in a rented minivan going to every Best Buy and Circuit City (different era) we could find, loading it up like we were ready for the apocalypse. It was insane.

If you’re an angel investor (or any investor) and you hear that the startup you just invested in did $500,000 worth of sales in its first month, you lose your shit. I was getting every possible introduction you could possibly get to every VC there possibly was. If you were a VC in 2006, chances are I was in your office telling you a very plausible story about how this is going to be the next…well this is funny—what are actually now Affirm or Klarna, leaders in the “buy now, pay later” space.

Everything was on fire. Everyone wanted me to speak at their event, I was throwing big parties on the rooftop of my Santa Monica building, and I was on top of the world. We were getting competing term sheets like crazy.

The market

Heading into 2007/2008, two things happened that we simply never saw coming. First, this little investment bank called Lehman Brothers melted down as part of a larger financial crash. All of a sudden fintech ventures, especially those that were essentially high-interest-rate sellers (like us), were in the crosshairs big time.

Overnight we went from everyone throwing term sheets at us to being toxic. Every VC pulled their term sheet, which was a bigger problem because we had long since run out of money (remember that tiny raise and all of those Xboxes we had to buy?), and I was funding this thing out of my own pocket (never do that). I was 10,000% sure that we were getting funded, so I thought I was going to make money on the float. I did not.

The model

A second thing happened while this thing was heading to the land of dumpster fires. We had to start collecting all of those weekly payments. Well, it turns out, the people who can’t afford to pay full price for an Xbox were the same people who didn’t have $19 per week.

You want to know who our number one customer archetype was? No, not 20-year-old college kids. It was single moms trying to buy a present for their kids (remember that $500,000 in the first month—that was Xmas). I grew up with a single mom and never met my father till later in life. You want to know how excited I was to be collecting from single moms like mine trying to provide something special for their kids? Zero. Less than zero. NFW.

I figured this was fixable with different customer targeting, but something inside me knew that I had painted myself into a corner of a business I didn’t actually want to see succeed, but had committed to so many people so publicly that it should.

The wind-down

If there’s anything I want you to take from this story, it’s not the funding or the business concept—it’s how it ended. I was humiliated. I had nothing but success in my previous ventures, and this was a very public failure. I don’t know how many of you have been in a community of folks, but when you see people at coffee shops and they deliberately avoid you, not because they don’t like you, but because they are embarrassed for you—it sucks. That’s a tiny microcosm of the feeling, but for those of you that have lived it—you get it.

I spent every waking hour for the next 18-plus months trying to resurrect this company (unsuccessfully), and I learned a few powerful lessons. The first is that no one ever tells you “Hey, it’s time to go home.” They will let you run yourself as far into the ground as you can go. It’s not their fault—they have no incentive to stop you. That’s your fault.

The second issue is that there is a point in our startups where we are no longer trying to succeed—we’re simply trying to not fail. That works never. The moment we’re in that death loop, we’ve already lost. Who do you know who wants to work for or invest in a company whose goal is to “not fail.” No one.

The third point is that all this time I built up this horrible nightmare of what it would mean to shut this company down. The giant fights with disappointed investors, the press coverage, the looks on my coworkers’ faces. I agonized to avoid this fate, shaving years off my life.

You know what happened? Nothing. Not a goddamn thing. I sat down with our lead investor, and he looked at me and said, “Yeah, we wrote this thing off like two years ago—we were shocked you were still running it.” (Okay, that would have been useful information two years ago, but…) You know what the press said? Nothing. Because no one gives a shit. My team had other jobs before I even had a chance to tell them it was over.

The takeaway

At the time, the fall of that company was the worst failure I had ever had in my life. I was depressed, humiliated, and financially took a major hit. I had no idea how I would ever recover. That was 17 years ago, and I was 33 years old.

The time it took me to write this story is about as much time as I’ve ever thought about it since. I can barely remember what happened beyond what I just wrote. It was at best a blip in my career, and a depressing footnote. About 99% of my present life today (family, career, life) hadn’t even happened up until that point of my life.

The losses suck, but it’s a moment in time. What matters is what we do after it.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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