Ask HN: How do you cancel your startup, after adoption?

2 points by TDiblik 3y ago ↗ HN

Everybody always talks about how to start/build your startup, however, once you've built something, people start to adopt it, and you realize it's loosing money, how do you undo it?

Some background: I'm about to start building a startup, because I'm fairly certain that one of the companies, in that space is going to crash in about 2-3 years. I would really like to take their customers from them (customers == organizations, about 30, I'm certain that about 10 of these are willing to pay for my software). They're (crashing org) making a software which requires updates like once or twice per year, due to legislation changing. Since, they're going to crash, or at least discontinue their product, organizations that purchased this product, have about half a year to adopt a new solution. My software is going to require same HW as their's does, so there's no upfront cost for these organizations. Switching to another HW is a question of about $15k in total, and 2 months of work. I've decided to label the software as SAAS (self-hosted, can't decide between monthly/yearly payments), since competition does this as well. My problem is that this competition is a corportation that can offer price around 10x lower than mine. Basically what I would like to ask per month (monetarily), they ask per year, since they operate at big scale.

My question: Let's say, that organizations, in need of my new software (about 10 at least) adopt it. I don't know if I will be able to acquire new customers (since the corporation can offer better pricing, support, everything). However, once those companies adopt my new software and I realize that it's not worth it, how do I undo my work? I'm really scared that I will be unable to acquire new customers, and eventually have to maintain this old money-loosing software. If I just decide one day, to not continue developing this product, can't they sue me?

PS: Is HN a place to ask these kinds of question? If not, where should I ask?

Thanks in advance.

3 comments

[ 53.1 ms ] story [ 408 ms ] thread

O__________O 3y ago ↗

If you’re that concerned, talk to an attorney on how to structure the business and contracts based on your specific situation.

Basically, have legal entity, legally maintain it, don’t be negligent, don’t commit fraud, and have legally enforceable termination clause in your contracts.

TDiblik 3y ago ↗

That's good, advice, however, should I do this before or after I develop this software? Do you think it's good idea to make software and then match legality to it, or do this before the development even starts? (First develop, ask questions later, or ask questions, then develop)

I personally would be more worried about getting customers, not legal issues or building a solution. I personally wouldn’t go after an existing market, not something I find interesting.

My core point was don’t ask for legal advice on the internet; have lots of legal experience and given the simplicity of your question, to me it tells me that you don’t either have the desire to do your own research and/or experience to do it; which is fine, but lots of people on the internet will claim they know what they’re saying and frequently do not or don’t have time to understand specifics of your situation.

All and all, to me, sounds like you under estimating how hard it is to sell people; that is, even if you had a legal and literally copy of the software and knew how to operate it at the scale needed, why would those companies do business with you?

(Please don’t answer, just trying to make the point that business is not just about having a solution people need.)