Ask HN: How do you know when to walk away?
The company:
Pros: 8 years old. $8m revenue, $1.5m earnings. Solid fundamentals. Decent barrier to entry, so not many competitors. High customer switching costs, so our customer base is stable.
Cons: High human touch (think professional services), so very unlikely to see software style "hockey stick" growth. In a highly regulated industry, so lots of bureaucracy hindering everything. Financials are plateuing due to complexity of scaling.
My deal: Founders want out, so I was brought in two years ago to operate, "professionalize" and prepare for sale. I get 15% of profits. In the event of sale, I get 15% of proceeds (somewhere between 500k-1m). If I walk, I get nothing.
We've been sitting in deal stagnation for about 18 months. Niche industry, so not many buyers (we know all of them and have shopped to all of them). Highly regulated, so everything is over-scrutinzed.
We've tried throwing money at the problem (lowering valuation, hiring bankers/lawyers to assist), but nothing seems to "unstick" us.
Founders are all-or-nothing kind of guys. I've floated the idea of dialing down to part time, but they're not interested.
I'm not sure how much longer to stay. I just want to move on with my life. How stupid would it be to walk? Would I regret it? Will I regret staying? Will it be a black mark on my career if I don't get this thing sold? Will it be a black mark on my career if I stick with it for too long?
Any help/advice would be appreciated. Thanks.
8 comments
[ 3.7 ms ] story [ 29.1 ms ] threadSeriously, though, your question is really only something that you can evaluate. If I were you, I would evaluate the probability of it getting sold in the next N months (where N is your limit before burnout/explosion). Then go to the founders and voice your concerns.
The founders obviously want you on board (potentially, they might need you). Explain to them that you're looking to exit, and discuss possible terms with them. Let them know that you're not particularly confident with the direction of the sale, and would like some quantitative numbers and timelines for the sale or sales goals. Negotiate, with them, terms of your departure. This way, you don't leave them in the lurch during a crucial time; in exchange, negotiate an exit route that still gets you some compensation (maybe if you leave in 6 months, company unsold, you still a smaller cut of the sale).
I doubt they want you leaving during a sale; they brought you in for that purpose. Discuss your concerns, determine a plan, a timeline, and metrics to evaluate success/failure. In exchange for your continued efforts, make sure you have an exit plan that advantages you as well as is considerate to them.
If you aren't seeing an end then don't expect it to come to you by waiting. I'd say move on and find another opportunity. I'm sure you have the resume to land another position and at the very least anything new you move into would be exciting for it's newness. You might regret it if they sell for $X in the future but you can only make decisions based on what you know now and what you think is best for you.
At first I thought you were the company owner to which I would have suggested to do exactly what they did which is to higher someone else to manage the company and incentivise them on a sale. All the pressure it sell is on you now and if you don't think it will happen you might want to move on.
Pick a time frame for not deciding, usually less than six months. Decide that at X time (and/or in the event of X), you will make your decision. Make this a firm commitment that you will make your decision at that time.
During that time, mull over which details are the "make or break". For me, if I leave a situation, the "make or break" frequently hinges on the person/people in charge and my judgment of the direction they are taking. So, to me, this is probably the single most important thing you have said:
"Founders are all-or-nothing kind of guys. I've floated the idea of dialing down to part time, but they're not interested."
Maybe not a deal killer, but certainly a red flag. Most details in life are a case of "it has it's good points and it has its bad points". But if the folks in charge are The Problem, the odds of fixing it are slim to none (with strong leanings towards "none").
Good luck, whatever you end up doing.
Tell the founders your thoughts. Tell them that you will stick around for 2 months to interview and train your successor, or that you can just walk away if they want to go "clean" for a replacement, and indicate that if you are presented with the replacement to train you'll leave early. Spin it along the lines of "This situation is not one that I am improving, so I need to find a different position somewhere, where I bring a lot more value; this is in your interest and mine. We both need to be doing something different, because the current track isn't giving us our sale, so if isn't going to happen with me hopefully it will happen with a new person."
It's possible you might regret it later, but that's true of all big decisions. If they are sold soon after you leave, it's not necessarily that you missed something, it may be that your leaving catalyzed things and lit a fire under the appropriate asses, either buyers or sellers, and that it wasn't something that would have happened if you had stayed.
It's impossible to say what will happen to your reputation or etc; but after all, just coasting for a couple of years doesn't necessarily look good either.
I say all this mainly because it sounds like you want to leave anyway. Many people would regard 15% of 1.5 million in a stable company a very good position, and would stay and accumulate savings.
You don't mention what opportunities you have elsewhere.