Tiny Co

After selling his first company, Superlatives, for $2 million after just nine months, Sulamon Ali moved to New York City with the entrepreneurial bug firmly planted. He spent 12 months jamming on bad ideas with a high school friend—a green energy newsletter, Twitter for colleges—before realizing they needed to return to what had worked: the Facebook platform ecosystem. That's where they'd already proven they could build viral products at scale.

In 2009, with the iPhone App Store's launch and in-app purchase capability, Sulamon saw a new frontier. He and his team launched Tiny Co with a simple name—they'd bought the domain for just $700. Their first game, Tap Resort, came together quickly. But the real magic wasn't in the product alone; it was in the distribution. Through a partnership with Tapjoy, a mobile ad network run by his friend Lee Linden from Microsoft days, Tap Resort shot into the top 5 free apps on the App Store. The numbers were staggering: in the first month, they generated between $500,000 and $600,000 in revenue.

They weren't hunting for customers—the App Store algorithm and Tapjoy's promotion did that work. Downloads turned into users, and users turned into revenue through in-app purchases. The unit economics looked beautiful: they were spending about $1 to acquire a customer and generating $2.50 in net revenue from that customer. They launched a second game and doubled down. Soon they were running at a $10-11 million annual revenue rate, and VCs came knocking. Unlike before, this time they said yes. Andreessen Horowitz led a $18 million Series A, with Mark Andreessen himself joining the board.

With fresh capital, they hired aggressively—growing to 80 people—and made more games. Revenue climbed to $20 million in year one, then $40 million in year two. But then reality shifted. Japanese mobile gaming companies, having saturated their home market, flooded into the U.S., opening San Francisco offices and spending massive amounts on customer acquisition. Within six months, the cost to acquire a customer went from $1 to $4, then $6, then $9. Suddenly, their beautiful $2.50 revenue per customer meant they were losing money on every acquisition. Monthly losses climbed to $200K, then $500K.

Where many founders would have rationalized or hidden from the numbers, Sulamon's strength was his paranoia. He looked reality in the face and saw the brick wall: the unit economics had inverted. The mobile game market, at least as they'd built for it, was no longer viable. They couldn't raise a Series B because every investor could see the same thing they could.

Tiny Co eventually sold, though Sulamon doesn't detail the final outcome in this excerpt. But the real win wasn't the exit—it was the lesson. Sulamon learned to obsessively track metrics that prove a business is *not* working, not just the ones that make you feel good. He became an investor himself, backing over 40 companies and watching for founders who stare reality in the face versus those who look away. That paranoia became his superpower.