Essay · The Losses
How a sound decision to raise more and grow faster walked me onto ground I could not defend · Juan Vegarra · July 2026
I have written elsewhere on this site about the first check I ever lost, two hundred thousand dollars on an education startup, where the mistake was mine alone and the money was mine alone. This is the second loss, and it was larger and harder in a way that has almost nothing to do with the number. Most of the money was not mine. I put in four hundred thousand dollars of my own, a quarter of the round, and the rest, more than a million, belonged to people who had trusted me with it. That second fact is the one I still turn over years later.
The company was called Vusay. I was its chief executive and I sat on its board. And it never launched. The reason it never launched is a more useful story than it first appears, because the mistake underneath it was not the obvious one, and the obvious one is wrong.
Vusay was an interaction layer for video. It let you engage with the inside of a video, at the exact spot on the screen where your interest was. You are watching and you see a bag you want. You circle it, and Vusay finds you where to buy it. A professor is lecturing online and you have a question about something on the screen. You circle that part of the video, your question goes straight to the teacher, and the two of you go back and forth about the precise thing you were both looking at. The video itself lived on platforms owned by very large companies. Our product sat on top of them.
The tempting lesson, the one I reached for first, is that building on top of a platform you do not own is the error. It is not, and I want to dispose of that reading before it misleads anyone, because it is false. Enormous businesses have always been built on ground someone else owns. An entire generation of software was built on top of Windows. The modern internet runs on cloud infrastructure that a handful of companies control. Today thousands of promising AI companies are built directly on top of models owned by someone else. Building on a platform you do not own is not a weakness. It is how most software gets built, and it was how software got built then. If that were the lesson, it would indict most of the companies worth admiring, and it would be useless to you.
Building on someone else's platform is not the mistake. It never was. The mistake is more specific, and it is easier to make precisely because the general version sounds so reasonable.
Here is what actually happened, and it is a chain of individually sensible decisions that added up to an exposed position. We had two markets in front of us. One was education. A student circling a point on a lecture and reaching the professor directly was a real, specific need, and education was a niche we could have owned. It was narrower and less glamorous, but it was defensible ground, with users who had a particular problem and a reason to stay. The other market was consumer and creator. Picture a globally famous musician with videos all over every platform, and a way for fans to engage with those videos at the exact moment and the exact spot that moved them. That one demonstrated beautifully. It was vivid, it was large, and it made the future easy to see in a single screen.
We chose the consumer market, and I want to be precise about why, because the why is the whole lesson. It was not distraction and it was not vanity. It was arithmetic. The consumer market was far larger, and a larger market justified a larger raise, and a larger raise would let us grow faster, and growing faster would produce a stronger exit. Every link in that chain is sound on its own. That is exactly what makes the trap so hard to see. You do not walk into it by being careless. You walk into it by being rational, one reasonable step at a time, until you are standing somewhere you never decided to stand.
Because where that chain led was onto the platform's own core turf. Engagement inside the video, fans interacting with a creator at the moment of attention, is not adjacent to what a video platform does. It is the center of what a video platform is. The education niche sat in a corner the platforms had little reason to care about. The consumer play sat in the middle of the thing they most needed to own. In choosing the market that justified the bigger check, we chose the one market where our core value lived on exactly the ground the platform could never afford to let someone else hold.
This connects to how the round was raised, and I want to be fair to that too, because there is a version of this story that turns it into a confession about fundraising and that version is not honest. You do not raise a seed round without showing how a large multiple can be reached in a reasonable time. That is not spin. It is the job. And in those days the motto was build fast, and the cleanest way to make a near-term return legible to an investor was a fast build toward an acquisition by a large player. That was a rational exit to put forward, and it was one of several we had mapped, because any serious plan considers more than one way out. An obvious strategic buyer is a normal thing to have in the plan. VerAvanti has one today. Most good companies do.
But an acquisition by the platform you are built on has a hidden property that the ordinary version does not. That buyer is also the one party who can take your value without paying for it. The plan was to move fast enough to build an install base that made acquiring us cheaper and quicker than building the feature themselves. That is a race, and it is a race with a cruel structure, because the very thing that was supposed to win it, proving the feature worked and that users wanted it, was also the thing that told the platform the feature was worth building. We were, in effect, running their market research for free. Move too slowly and they build it before you have leverage. Succeed visibly and you hand them the proof that building it is worth their while. On their own core turf, with a product they could offer for free to an audience already inside their walls, build beats buy the moment the idea is validated. And that is what happened. Before we could close the next round, a large platform shipped a feature that did much of what Vusay did. I am confident they were aware of what we had built. I am not going to argue the point, because it changes nothing. Whether they copied us or simply arrived at the obvious from a position of total control, the result was identical. You cannot raise a five million dollar seed for a product the platform now offers itself. The round never came together. We never launched. And the money from people who trusted me became unrecoverable.
I have looked for the version where this was bad luck rather than a bad position, and it does not hold. The tempting one is speed. Raise a few months faster, launch ahead of the platform, build a base, and have something to defend. Perhaps. But that is a story about winning a race whose finish line the other runner controls, and building a company on the hope that a platform simply chooses not to use its own ground is a wish, not a strategy. The other tempting excuse is execution. We built with excellent contract developers across Europe and Eastern Europe, and running a first product across many time zones was genuinely hard. All true, and none of it is why Vusay failed. The product got built. The company died over which market we built it for, and where that market sat, not over how well we built it.
So here is what I carried out of it. The lesson of the first loss, the edtech check, was about my own discipline, and the machine I built in answer was a scorecard that sits between my affection and my capital. The lesson of Vusay is different and it is about position. When more than one market is open to you, the one that justifies the bigger check is not always the one you can defend, and the platform's own core turf is the least defensible ground there is. So now, before I commit to anything, my own money or anyone else's, I ask a question I did not ask then. If this works, does the largest player in the room have to buy us, or can they simply build us? If the honest answer is that they can build us, no plan and no pace fixes it, because I have made building cheaper than buying and handed them the reason to choose it.
It is not an accident that the company I help lead now sits on the opposite side of that question. An obvious strategic acquirer exists, exactly as one existed for Vusay. A large medical device company is a natural buyer, and that is a strength, not a risk. The difference is the one that decides everything. VerAvanti holds a worldwide exclusive license to the core technology, so the thing that makes the company valuable is a thing the acquirer cannot simply build for themselves. At Vusay, on the platform's turf, build beat buy the instant we proved the idea. At VerAvanti, buy beats build by construction, because building is not available to them. Same obvious acquirer. Opposite math. And the only thing that flips it is owning something the buyer cannot replicate. Every time I explain that license to an investor, I am describing, whether I say so or not, the thing I learned watching Vusay die on ground I did not hold and could not defend.
I think about the friends and family more than the four hundred thousand of my own. My money was mine to risk, and I had risked the largest single piece of it, because I believed in the team and in a tool a large operator would want. Losing my share cost only me. Their share was an act of trust in a track record, and when it was gone I could not hand it back. They had been right about me in the way that should have mattered. I had built a real company before, and I would build real ones after. They lost their investment anyway, not because their judgment about me was wrong, but because I pointed the company at the market that justified the bigger raise instead of the market we could have held. That is a particular kind of debt. You cannot clear it with an apology, and you cannot clear it with a later success somewhere else. The only thing you can do with it is let it change how you decide, permanently, so that the next people who trust you are never exposed to the mistake the last ones paid for.
The scar is not in my confidence. It is in the architecture. I choose markets differently now, on purpose, because of exactly this.
That is why I tell the losses, and why I tell this one at the same length as any of the wins. The wins teach you what to reach for. The losses teach you what to check before you reach. So here is the check, the one I did not run and have run ever since. When you have more than one market you could pursue, do not choose only on which one justifies the largest check. Ask which one you could still hold if the biggest player in the room decided to want it too. If the exciting market is the one sitting on that player's own core ground, the size of the check it justifies is not an advantage. It is the bait on the trap. I learned that at a cost of four hundred thousand dollars of my own and more than a million of my friends'. You can have it for the price of the question.
Juan Vegarra is the author of An Outsider's Playbook (forthcoming). The views here are his own. More from the Notebook · Continue the conversation
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