In the world where imaginary friends co-exist with humans, Timmy Failure is an 11-year-old living in Portland, Oregon with his single mother Patty. Timmy runs Total Failure Inc., his own personal detective agency, and “solves” cases. Much of Timmy’s adventures revolve around himself traveling with his imaginary polar bear partner Total (implied to be the result of his father walking out on him and his mother) across the city looking for cases and outwitting the “Russians”; actually just bearded hipsters. Among his small social group are his best friend, Charles “Rollo” Tookus, a former member of Total Failure Inc., who quit after a mission gone awry, and Molly Moskins, a perky and optimistic girl who has a crush on Timmy. Timmy considers his arch-enemy a girl named Corrina Corrina, who is actually very friendly to him and appears oblivious to his animosity towards her, though it is implied to be due to him having repressed feelings for her.
While retrieving a dead hamster from a fellow classmate, Timmy’s Failure-Mobile, a Segway that actually belongs to his mother, is stolen right out from under him. He cancels his other cases and recruits Rollo, who believes that the death of their class hamster and the stolen Segway are linked back to the Russians. At the library, Timmy learns from Molly that Corrina is part Russian and believes that she is behind the theft to dismantle his agency. Because of his unusual outbursts and behavior in class, Timmy begins seeing the school counselor, Mr. Jenkins, whom Timmy begins to slowly but surely trust with his mission. He also learns that Patty is dating a meter maid named Crispin who is friendly and aloof, but whom Timmy dislikes as he “[doesn’t] collaborate with law enforcement.”
Timmy learns that Corrina’s father owns a bank and believes that his Segway is there. He and Rollo try to sneak in but get kicked out by security. Mr. Jenkins manages to get Timmy to do his homework as part of a “mission”, but while doing so learns from Patty that they have to move to an apartment, which upsets Timmy as he has a “heavy case load.” While on a field trip to Bonneville Dam, Timmy jumps to the false conclusion that Corrina plans to shut off the power to all of Portland. Unaware that she is still with the group, Timmy rushes through the dam to find her while being chased by his teacher, Mr. Crocus. They end up outside the dam just as the operators open the flood gates. Timmy tries protecting Crocus from the flood, as he considers him an intellectual equal, but it turns out that they are high above the flood gates. Timmy receives a three-day suspension for his behavior, and Crocus quits his job and is replaced while Patty angrily tells Timmy that she was fired because she had to stay home with Timmy, and shuts down Total Failure Inc. Saddened over his fate of having to be “normal” and moving to an apartment, Timmy lets Total go at the zoo.
Mr. Jenkins talks to Timmy and reminds him that he must learn from his mistakes so that he can be a better person. Invigorated after discovering a “Russian bug” in his cookie, Timmy recruits Crispin to liberate Total from the zoo. As they are driving back, they spot a purse snatcher and Crispin gives chase, catching him. Timmy considers aiding him but decides to simply call the police. After a passerby asks him and Total to move, acknowledging his presence, and Timmy subsequently accidentally backing up his truck into a pole, Patty comes to see Timmy in the hospital and he apologizes for his behavior. Patty tells Timmy that she wants him to re-open his detective agency. Soon after, Crispin shows Timmy that the Segway was impounded at the police station this whole time for being parked in a no-parking zone, convincing Timmy that the police are working with the Russians. Timmy comes out to give a speech at an animal fundraiser set up by Molly and excites the crowd with his speech on allowing polar bears into the school. As Timmy wishes that Crocus could be there, he suddenly believes that Crocus was kidnapped by Corrina and the Russians and sets off with Total to “rescue” him.