Most people know Nick Woodman as the man who created GoPro. The tiny camera surfers, skydivers and other people use for filming. The company that made him a billionaire went public in 2014.
But there is a chapter before all of that. One that Woodman has publicly discussed, in an uncommon level of sincerity for someone in his position. It is the tale of a company named Funbug. And it is the kind of business failure that can either shatter a person, or remould them anew.
A Silicon Valley Kid With Big Dreams
Nick Woodman was born in Menlo Park, Calif., on June 24, 1975. He grew up in the heart of Silicon Valley, where common sense suggested that starting a company is normal. His father, Dean Woodman, was an investment banker and a founding partner at a leading firm, Robertson Stephens. His stepfather, Irwin Federman, was a general partner at U.S. Venture Partners. The background of his childhood was business.
When Woodman first entered the University of California, San Diego, he started out studying visual arts. One of the reasons he had selected that school, he later confessed, was due to the proximity to the beach. And surfing was his love, and it would soon play a much greater role in his life than he knew.
He graduated in 1997 and wasn’t out there searching for a regular job. He had wanted to build something of his own. And in the late 1990s, finally, the internet had made that dream feel attainable.
The World Was Throwing Money at Ideas
To understand what happened to Nick Woodman, you have to understand how the world looked in 1999.
The internet was young and exciting and entirely out of control. Investors were throwing money at any company with a website and a business plan, no matter how flimsy. From 1995 to March 2000, the Nasdaq Composite index jumped about 400%. By 1999, internet companies constituted 39% of all venture capital investments in America.
Investors kept pouring money into companies with no realistic prospect of turning a profit. The logic at the time was simple and dangerous: get big fast, worry about money later.
Into this landscape came a 24-year-old with energy, connections and an idea.
Funbug: The Idea That Founded Millions but Never Launched
Nick Woodman founded Funbug in 1999. It was a combination of online gaming and advertising. People would log onto the platform, play games and get a chance to win cash prizes. Companies could use it to reach younger audiences. On paper, it landed squarely in what investors were hunting for at the time.
Using his Silicon Valley connections, Woodman raised $3.9 million from investors. This included $235,000 from his own father to start. That detail matters because it wasn’t just other people’s money. It was personal.
The money came in. The team was built. And then one year later, the site still hadn’t launched.
In a book describing the internet’s biggest catastrophes of the era, Funbug was criticised for spending more than $3 million of investors’ money on annoying Java-based online games. The platform struggled to develop an actual audience. There was no clear way to make users return. The business model had no stable ground beneath it.
Then came April 2001.
The Dot Com Bubble Popped, and It Took Funbug With It
The Nasdaq declined from 5,048 to 1,139 between March 2000 and October 2002, wiping out nearly all its gains from the dot-com bubble. By the time the index hit bottom, most publicly traded dot-com companies had collapsed.
Most internet stocks lost roughly 75 of their value from their highs, erasing about $1.755 trillion.
Funbug was among the casualties. The business folded in April 2001. It was memorialised on a site called f**kedcompany.com, a list of the dot-com era’s biggest business failures. The $3.9 million that investors had put in was gone.
The Problems That Were Already There Before the Crash
The blame for Funbug’s failure gets laid at the feet of the dot-com bubble bursting. And yes, the crash did it. But if you have a closer look, Funbug was already in trouble before the market fell to pieces.
The first problem was the product itself. Funbug wasted more than $3 million creating Java-based online games that found people annoying instead of fun. That’s a huge problem for a company whose entire conceit was to get people to return and play. If the games aren’t fun, nothing else matters. The users do not come. And when users do not arrive, advertisers do not appear.
The second issue was the business model. Funbug was attempting to serve two masters at once, everyday users looking to play games and receive prizes, and businesses looking to tap into that user base with the platform. That sort of two-sided arrangement only works, if both sides turn out in sufficient numbers. It struggled to attract users and advertisers simultaneously, and ultimately its venture could not earn revenues.
The third, and maybe most truthful problem is one that Woodman himself acknowledged years later. When he reflected on the reasons Funbug failed, part of it was that although he loved that creative process, the actual product itself wasn’t something he really cared about. That may sound trivial, but it isn’t. When you are building a company and things get tough, and they always do, the only thing that keeps you going is true love for what you are building. Funbug did not have that with Woodman. He was pursuing an idea that suited the moment, not one arising from something real within himself.
The dot-com crash was the final straw. But these fault lines have long been there.
The Weight of Other People’s Money
What Nick Woodman has said about this time sets him apart from many entrepreneurs who quietly move past their failures. He didn’t brush it aside. He didn’t immediately frame it as a learning experience and move on.
“Nobody likes to fail,” he said. “But the worst part was I lost my investors’ money, and these were people who believed in this young guy who was passionate about this idea.”
He called Funbug a “colossal bust.” The experience made him question himself: “Are my ideas actually good?”
That is a difficult thing for anyone to sit with, especially someone raised around successful businesspeople who believed he had what it took. Losing investor money feels different from losing your own. It carries a deeper sense of responsibility, and often, shame.
Funbug’s collapse left Woodman financially strained. Millions in investor capital were gone, and he had to lean on his parents while he regrouped. At 26, he had no company, no personal money, and no clear path forward.
Two Failures, Not One
Another detail often left out of Woodman’s story is that Funbug was not his first failed company.
Before Funbug, he started EmpowerAll.com, an e-commerce site that tried to sell electronics to young consumers at razor-thin margins. EmpowerAll burned through cash, failed to scale and collapsed during the dot-com crash. So, when Funbug shut down, Woodman was not recovering from one failure, but two in quick succession.
That context matters as it shows what the next chapter demanded from him and what it took to try again.
After Fanbug Failure
After Funbug collapsed, Woodman did something that might sound like running away, but was actually necessary. He planned a five-month surfing trip along the coasts of Australia and Indonesia.
He needed distance from Silicon Valley, from the conversations, and from the weight of what had happened. Surfing had always been the thing he returned to when everything else felt uncertain.
He also made a promise to himself: invent a successful product before turning 30. If he couldn’t, he would get a traditional job. The fear of that ordinary path pushed him to keep trying. That trip would eventually spark the idea for his next company.
What Funbug Actually Costs
Funbug cost Woodman $3.9 million of other people’s money. It cost him two years of work building toward something that never properly launched. It cost him confidence that would take time to rebuild. And it meant he could never approach his next idea without the memory of failure.
In the United States, about 20% of new businesses fail within their first year. Fewer than half survive five years. Only about one-third make it to ten years.
In that sense, Woodman’s failure was not unusual. But the scale of it, and the personal responsibility he felt toward the investors who trusted him, made it something he carried differently. He moved back into his parents’ house and started again from the beginning.
What Came After
The story of what Nick Woodman built next, working eighteen-hour days in his parents’ house, driven by what he later called “constructive fear”, is the success story. That story is about GoPro.
“I was so afraid that GoPro was going to go away like Funbug that I would work my ass off,” he later said. “That’s what the first boom and bust did for me. I was so scared that I would fail again and that made me completely committed to succeed.”
That quote explains the link between Funbug and GoPro. The failure wasn’t just something he survived. It became the fuel. The shame, the fear, and the memory of losing other people’s money pushed him harder than ambition alone ever could.
The story of Funbug ended in April 2001, with a shutdown and a place on a list of dot-com disasters.
The next GoPro success story begins with a surfing trip, a garage, and eventually the NASDAQ. And it could never have unfolded the same way without this one coming first.
If you want to know more about Nick Woodman and his business then visit GoPro website, Instagram, x and Facebook.
To read more such business failure stories from around the world, then keep an eye out inspireprenuer magazine for every Saturday.
