This is why I fundamentally don't like investments. This is why profitability is king. Not users, not revenues, nothing except profits! This is why self funding is so important.
In life there is a right way to do things and a wrong way. The 37 signals (bootstrap) model is the proper way to do web business. Taking other people's money is the wrong way.
To author: Dude, you probably care more than the investors. Make it into a good thing, raise awareness on why the investing model should be approached with trepidation and skepticism. Then move on.
Feel free to reach out and drop a line, you aren't alone and shouldn't feel like it. It's only failure if we fail to learn positive lessons from an experience.
It seems old fashioned, but the business model part of a startup is often the trickiest and the most unknown -- and worth figuring out, because ultimately the go hard or go home mentality.. goes home when they're cut off, or run out of cash. Faking it till you make it saying things are "great" like everyone leaves you where everyone ends up -- going home. Having real people around, not full of phony killing/crushing-it-isms is worth more than funding in a lot of ways, a good group of peers helps pick you up and keep you going.
To the poster, thank you, you're brave in being open and honest so those disillusioned by this kind of thing can't look away and flinch. Take your lessons forward and build something to take care of a problem that others want solved as well, not focused on the goals of investors.
Maybe...maybe not. Sometimes capitalization is what your business really needs. Sometimes it isn't. I can provide a whole list of "web businesses" that bootstrapped to profitability, but I can come up with an equally impressive list of companies took really significant capital. I can certainly find businesses that would have not succeeded without the capital to sustain them through their early years (I experienced that first hand) ahead of their ultimate success.
Smart entrepreneurs know how to be strategic with their fundraising. They know when to take money, and (just as importantly) when not to. They know that at key moments a capital infusion can propel a company to big growth. They know that at the wrong moment money can be the distraction that keeps them from executing.
I have a huge issue with your post. You're wrong. Experience has shown me that funding can be a huge asset, except when it's not. It's what makes entrepreneurship so incredibly difficult. Funding, and the way you pursue it, are really tough to choices you have to make. After which you have to live with the consequences. To reduce it to "In life there is a right way to do things..." shows a real lack of understanding of that challenge.
Second this. Bootstrapping is great, and it's even underrated. Most people raise too much too early, and it ends up hurting them. In the end VC capital is a tool though, and you can use it well.
One position from which raising money might be a good idea is when you have a product that is already scaling and shows strong product/market fit, and you know (know, not think) that going 10x on spending is going to let you grow a lot faster.
Cool you could provide a list of exceptions to the rule. Aquisitions, IPO, Unsustainable Co's., and companies that fund themselves through continuous investments are exceptions to the rule.
I don't get why web business people want to change the way business had been done for all of history.
You make a product, you sell it, you use that money to grow.
Don't dilute that process, and if any key part of that process is being omitted you should be very skeptical.
If you restrict yourself to only doing things the "proper way", then you are going to be competing with people doing it other ways, including what you consider to not be the proper way - taking investment to go for hyper growth before profitability. Can your bootstrap startup compete with a startup that has outside funds to hire more than you, market more than you, release more often than you, and learn more than you? I've noticed even the rich people with 1 or more big exits behind them here in SV often still take investments for their next startups. They don't lose all their money if things go wrong, and their investors pull a strings to help them, since they have money in the game. You lose a lot of advantages when you reject investment, and you can end up risking a lot more.
really strong words. thanks for sharing this. keep your chin up, the investors knew the risks of angel investing / venture capital. be proud that your gave it your all.
if you didn't take this risk, you would always look back and wonder what if. Ik that's cliched to high hell but it's true
Don't worry about the investor's money - it's called venture capital for a reason.
You've probably learned a tremendous amount from the experience.
Think about what the next step for you is after this company. Sounds like you're a developer and can easily get a well-paying job. Sounds like there is still some money left and you can take some time and decompress from the experience.
This isn't doom. It's the first step of what you're doing next.
Agreed. Part of the job of being an investor is to balance your portfolio, and losses are to be expected. Such a world doesn't exist where investments are risk free.
There are many entrepreneurs who have raised again from VCs even after they didn't make it from their first raise. As long as you tried your hardest, there isn't much else more you can do. Keep at it.
When I was 25 I lost more than $20,000 of my own and FFF money investing in my own project only to have it fail. At the time I was obviously, really upset.
Fast forward to today -- looking back it was one of the greatest investments in my life so far as all the stuff I learned both emotionally, psychologically and professionally has really helped with current work and life.
I used to think losing money was a big deal, but now I realize it isn't. Investors are in a sense "buying" your time. Can you really put a value on your time? Your own life?
Sure, the memories were disappointing and frustrating, but I wouldn't have had it any other way. And yes, I plan to save and try it again.
EDIT: Just to be clear I'm not saying throw VC money around... of course you still need to be responsible.
It sounded like you supported what the original commenter said, not to worry about investors.
Having a slack attitude towards money (our own money or others) doesn't build a business or an understanding of value that ultimately ends in a revenue stream.
It's nice of you to share you story -- I don't think many folks do. I have similar experiences (good and bad), but I think the one thing that really stands out for me is that investors are in a sense "buying" your time, not much different than consulting...... :)
> Having a slack attitude towards money (our own money or others) doesn't build a business or an understanding of value that ultimately ends in a revenue stream.
Of course you need to value other people's money, but when they gave you they money they know that there were higher chances to fails than to succeed. If you did 100% of what you could have done, you have done your job. If it was easy everyone would do it.
I think I'd be much more open to funding if it was like this because I'm used to people paying me to build ideas, it just might be my own ideas that someone else happens to agree with.
I remember the first $10,000 I lost on a business. It was my own money (well, a loan I ended up paying for years afterwards). Losing that much money when you make minimum wage is huge disastrous. But it taught me a lot about businesses, money, and myself. I do not regret what happened.
I have not, but isn't it safe to say that if this money wasn't going into venture capital it would probably be going into something like oil speculation or mortgage backed securities, which undoubtably has much more negative impact on our world then giving some people jobs to try out their crazy ideas for a few years dont you think? It's good OP is concerned about his investors, but its just money from people with lots of it. His own money is more of a concern imo, but at least the job market is good for someone with his skills. He'll bounce back, hang in there!
I got pretty freaked out about playing with other people's money when we first took on investment. On discussing it with one of the lead investors, his response was "If all of this goes wrong, my children will still have shoes on their feet."
Your investors would not be investors if the failure of any one of their investments would create an insufferable financial burden upon them. If that statement is not true about a particular investor, that's their fault and not yours.
Indeed, it may be possible to radically reduce expenses, get a moonlighting job, and make the business more easily maintainabile at that point as well. If the investors won't call you back, and you and (and presumably co-founders) want to commit to being successful, it may not even be too late if you are willing to get secondary jobs to pay bills with.
Absolutely agree with this - it's venture captial. They're taking a risk, sure you should be responsible with their investment, but it's a risk. They're not buying guaranteed success, if they were I'd imagine it'be a far larger pricetag than what they paid.
Best of luck, but definitely do _not_ feel guilty.
If you've set up your company correctly, you should be personally protected from liability if the company fails, right?
Assuming that's true, then perhaps you'll end up with a tarnished reputation, but your life isn't crumbling apart. It shouldn't be too difficult to find a more conventional job with a decent salary, especially if you've managed to create a product that people wanted to invest in.
If this person has a very good way of explaining to potential employers about the logistics of what went down, it shouldn't be a liability in getting a job and powering up the skills before trying again, if that's their life goal to be self-employed. Most of the startups I've seen fail isn't for lack of technical ability but for completely over-estimating there being a market for their product - either wrong time or wrong market or wrong product.
It can be hard to keep your head up in this situation, but, you should try. Just because this startup fails, don't let it effect you forever. Sure you have a right to be upset for now, but know that you have to move on.
In the way that you sold your idea to the investor (whether it was by way of having a product to show, or just fancy talking, or a combination of both), you will have to rise from the ashes and prepare to do it again.
You can, and probably should eventually frame this as experience, because thats exactly what it is. A lot of investors will look at this as a learning experience for you, if your able to keep yourself from being rattled out of the game.
The next time around, you will be able to look back on your experience, and hopefully make different choices that will help you stay at the edge of your seat.
Lastly, sometimes ideas just don't work, despite all your best efforts. Sometimes there is little you can do to change the course of history. Often, its a combination of both bad decisions, and being in the right place at the wrong time, or the wrong place at the right time.
Been there, done that. You know what? Failure is just an event. Its not you. You havent lost your "touch", because there wasnt one to lose from the start. You just got lucky. It didnt work out. Now, understand that being average is OK, and pretty awesome too. So you didnt hit it big, but you had an average run. You did not become Instagram, but you had average sales. You made average money and had average success. Again, average is awesome. You got further down the line than most other people have (me included).
So you failed. Dont obsess about it. Tell your family the company is not working. Dont try an be a hero. Be honest, they appreciate that more (fuck them if the dont). Entrepreneurs have to meet these weird social standards that are never within reach. You think Warren Buffett has ever getting a break? He gets shit every day from deals gone sour.
But keep your head up. Failure is not you. You are a person, and you did pretty good. Your investor lost the money the minute he decided to play investor. Doesnt have to do anything with you.
If you want to talk about it with someone who fails hard every month, just send me an email (on profile). I wont make this public.
Also, dont be ashamed. You got to the NBA, but you were not Michael Jordan. Who cares? I bet you played a good game, and got some good stories from it. Best wishes!
I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed. -- Michael jordan
Nah, man. Only nerds and failures talk like that, brahiem. </s>
Wise words indeed. One of the things that has always bugged me about certain portions of the startup culture is that over valuing of 'success'. As far as I am concerned, if you learn something from the experience, you can't fail.
I do believe this reply has OP's best intentions in mind, but I find it to be a bit fatalistic. OP may very well have "the touch", it just may be that this particular venture wasn't the right opportunity for that to shine through. My point is, noone can tell you how far you will or will not go in life; a single failure is a data point, sure, but only one among many. If OP wants to go on continue being an entrepreneur, he should learn from his mistakes, dust himself off, and go at it again if he can find the opportunity.
A quirky recent story about being honest and accepting what you have accomplished rather than trying to act like you're a basketball bigshot:
An American basketball player, having not had much luck with NBA aspirations, took a job in Western Australia, playing for a state league team. These state league clubs have a player budget of about $60,000 spread across a men's team and a women's team - 20 players in total. The league in question is not likely in the top four leagues in Australia.
Said player told his hometown paper that he had a three-year deal for $1m, that he was going to be playing in the best league in Australia, that it would be on a tropical island in the West (it's mainland), that he'd get a beachfront 3BR apartment, that the club was flying him and his family the last leg on a private jet (it would've been a bus from Perth) and that his signing made news across Australia (fat chance).
His club found out about these claims, learned a bit more about his character besides this, and cut him before he'd played a game.
Dead post (curiously, the account is dead with no obvious cause; perhaps it was associated with accounts that were up to no good?)
zerocool1989 3 hours ago | link [dead]
I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed. -- Michael jordan
Sometimes we think we have a lot to do with thing going well, or wrong, but the saying of opportunity is a combination of luck and lots of preparation and practice is something I'm finding to be more and more true each year.
It's also something I have heard echoed strongly in pg's recent essays on why/how/what to build as a startup.
Your investors are unresponsive to your questions? Then they've probably already mentally moved on : They're not hanging on your every word; They're not dependent on you; and you're not letting them down as badly as you feel you are.
If it's any consolation, they may be watching to see whether you just give up, or stick with it to the end. You may be surprised that they would back you again with a different idea, since you're so obviously sweating over every dollar of their money...
You failing is part of your investors business model. They've moved on, they no longer care.
This sounds like a negative statement, but it actually has extremely positive repercussion: you no longer have to worry about them AND you have a few months to do whatever you want. Anything. Have fun and enjoy it. Maybe build something cool, completely new, something that you want to see exist in the world. And you never know, just letting go of the burden, accepting that what's done is done, and enjoying creating something for fun may actually lead to something.
If I could add a paragraph to the end:
Yet, sometimes with failure there comes new beginnings. While my pain is real, I do understand that investing is a profession with high risks involved. As much as I hate to admit it, this time I was the risk that didn't turn out as well as hoped. So I have to take this to note and head out to start something new. Endings are too easy. It's the ones who keep the story going, no matter how well it ends up turning out, that get remembered.
To the author of the article: I have been staring at the screen for two mins after reading the article. I really want to say something encouraging and supportive; but I found myself at a lost of what to say. Maybe it is because I really understand what you mean by the sense of "impending doom." When I had the sense of "impending doom," I feel that people just don't understand--How can I not feel depressed when the situation is getting worse and worse? But life moves on.. And the situation will get better one way or the other. Ten years later when you look back at this, I am sure that you will realize that it is not as bad as you think it is... You have to stay hopeful!
Failure is a life event, and it sucks. (Just like getting ditched, getting fired, getting sick, and so on.) Frankly, I'm glad I'm not in your shoes right now. But it's not the end. This thing you built will not take you down with it. You'll still be standing, and ready to move on to the next chapter.
Fuck them. Don't let it ruin your life. It was a gamble and they knew it. No risk. No reward. If it were a sure thing, credit unions would be giving cash. If they were investing their retirement funds, that's their issue, not yours.
I'm sure you worked hard. Tried your best. What else can you do. If it's over, move on and get out of the current gig now. Tomorrow even. It sounds like your investors already have.
You've made sacrifices as well. Call them tomorrow, thank them for what they did, shut the door and open a new one.
Curious question: If an entrepreneur raised money from VC, and things go south, is the entrepreneur's career basically "done" (e.g. blacklisted by every VC on the planet)? Can he start another venture and get VC money again?
How is it compared to being fired? (Being fired = you can find another job, might need to explain why you're fired to potential employer, but life goes on)
From my (admittedly quite limited) experience with investors and entrepreneurs here in the bay area, it's quite the opposite. Failure in itself is not at all a black mark. Product/market fit not existing is a common reason for startup failure and it's well understood in the investor community.
I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed.
Own it. Own this failure and figure out (if you havent already) what went wrong and own it. This isn't just about damage control, this is about realizing the struggle in keeping a business a float is an asset, extracting as much data and knowledge will drive the success of your future projects.
And above all, do not let the investors forget you with a bad taste in their mouth. Own it, again. Remind them why they invested you in the first place, you never know what the future holds. Don't let it just burn up!
I had a company fold up on me like this as a team manager. I was close to the founders and they ALL did just fine. I also did fine. The only one I fault were some damn famous investors that didn't even respond to requests to have us meet at their related hiring portfolio companies. Cold.
Everyone else (including the founders), love them -- we all ended up on our feet and were better for the whole awesome startup experience.
The point about taking other people's money is a big one. I am in the process of starting a business doing cloud computing for accounting and ERP and we decided specifically against taking other people's money. I know that will sound like heresy on HN, but I want to discuss why we made that decision. I think other founders may find this to be a useful piece in that it may confirm that taking other people's money is a good decision or it may help question that. I don't think our decision was right for everyone.
The basic issue that made us decide the way we did was that accepting VC money locks you into the VC exit strategy. This means you are building either an acquisition target or a company you want to take public. If that's what you want to do, partnering with VC's makes a lot of sense. They may help you get there faster. If you aren't sure that's what you want to do there is nothing wrong with taking the first steps on your own before committing to such a strategy.
There's a second issue too, which is what I call "overfunding syndrome." The basic truth is that the vast majority of businesses will fail before they succeed. If you are funding it yourself and the like you have more options than if you are racing towards the VC exit strategy gamble. This is why bootstrapping can often be a real business saver.
I suspect we could find investors if we wanted or needed to. But the fact that we don't need to at the moment and aren't sure we want to lock ourselves into the acquisition-or-IPO cycle means for us the best option is keeping our options open. That doesn't preclude changing our minds down the road, but it is a lot easier to decide that "you know, maybe we could use venture capital after all" than it is to change one's mind and get out of the funding cycle. To my mind this is part of staying upstream of the larger problems.
We got A+ investors but we failed to deliver. We had founder breakups early on and I was made a single founder for the last two years. I ended up working twice as hard to make up for my founder's departure. (The stress and long hours actually made me less productive.) It almost killed my health and my relationship with the loved ones.
Don't take it personally. You have given your best shot and remember you have your own opportunity cost. It's a fair deal to the investors. The important thing is to handle the wind down professionally. Try to savage what you have (team or product). You or your investors may not get anything out of it but they sure would appreciate your effort.
If they're professional investors, they know all the investments don't work out. Communicate honestly about what's been tried and failed, but don't ruminate excessively about having "let them down".
If 'doom' is still a month or two off, but inevitable, attempt orderly wind-down. Maybe a corporate entity is bankrupt. Maybe employees need a fair warning. Maybe there are salable assets. You can ask for help, even from strangers, even non-anonymously. It will be hard to get help if still presenting a facade of "everything's great", and since the 'doom' will be public knowledge soon enough, stop pretending. Instead, use this as practice in confronting the worst and making-do as best as possible with bad options.
treat everyone with respect, honesty, and be forthright. it'll feel awful and scary, but it'll mean a lot more than if you made everyone rich, or at least helped them with some more paychecks. people will remember your character and your behavior far more than any money you made or lost for them.
i think a lot of people forget the incredible risks and burdens founders take on. i saw a quote in inc magazine that put it best, something to the effect of "if this business goes under, you lose your job, but i lose my house and maybe even more." never having founded anything i can't imagine the burden your under, but i know it's immense. that said, remember to be forthright with everyone.
168 comments
[ 3.0 ms ] story [ 87.1 ms ] threadIn life there is a right way to do things and a wrong way. The 37 signals (bootstrap) model is the proper way to do web business. Taking other people's money is the wrong way.
To author: Dude, you probably care more than the investors. Make it into a good thing, raise awareness on why the investing model should be approached with trepidation and skepticism. Then move on.
It seems old fashioned, but the business model part of a startup is often the trickiest and the most unknown -- and worth figuring out, because ultimately the go hard or go home mentality.. goes home when they're cut off, or run out of cash. Faking it till you make it saying things are "great" like everyone leaves you where everyone ends up -- going home. Having real people around, not full of phony killing/crushing-it-isms is worth more than funding in a lot of ways, a good group of peers helps pick you up and keep you going.
To the poster, thank you, you're brave in being open and honest so those disillusioned by this kind of thing can't look away and flinch. Take your lessons forward and build something to take care of a problem that others want solved as well, not focused on the goals of investors.
Maybe...maybe not. Sometimes capitalization is what your business really needs. Sometimes it isn't. I can provide a whole list of "web businesses" that bootstrapped to profitability, but I can come up with an equally impressive list of companies took really significant capital. I can certainly find businesses that would have not succeeded without the capital to sustain them through their early years (I experienced that first hand) ahead of their ultimate success.
Smart entrepreneurs know how to be strategic with their fundraising. They know when to take money, and (just as importantly) when not to. They know that at key moments a capital infusion can propel a company to big growth. They know that at the wrong moment money can be the distraction that keeps them from executing.
I have a huge issue with your post. You're wrong. Experience has shown me that funding can be a huge asset, except when it's not. It's what makes entrepreneurship so incredibly difficult. Funding, and the way you pursue it, are really tough to choices you have to make. After which you have to live with the consequences. To reduce it to "In life there is a right way to do things..." shows a real lack of understanding of that challenge.
One position from which raising money might be a good idea is when you have a product that is already scaling and shows strong product/market fit, and you know (know, not think) that going 10x on spending is going to let you grow a lot faster.
I don't get why web business people want to change the way business had been done for all of history.
You make a product, you sell it, you use that money to grow. Don't dilute that process, and if any key part of that process is being omitted you should be very skeptical.
Who cares about growth? I don't. Not when it means I need to compromise my board, take on debt, ect.
I don't know how else I can get the point across but all you should care about is profitability.
And again those big deals are such a small percentage that you shouldn't even plan for that. Just make a profitable company.
I'd rather be profitable at a significantly smaller scale, because this isn't a sprint and in the end you actually have sustainability.
if you didn't take this risk, you would always look back and wonder what if. Ik that's cliched to high hell but it's true
Don't worry about the investor's money - it's called venture capital for a reason.
You've probably learned a tremendous amount from the experience.
Think about what the next step for you is after this company. Sounds like you're a developer and can easily get a well-paying job. Sounds like there is still some money left and you can take some time and decompress from the experience.
This isn't doom. It's the first step of what you're doing next.
There are many entrepreneurs who have raised again from VCs even after they didn't make it from their first raise. As long as you tried your hardest, there isn't much else more you can do. Keep at it.
Fast forward to today -- looking back it was one of the greatest investments in my life so far as all the stuff I learned both emotionally, psychologically and professionally has really helped with current work and life.
I used to think losing money was a big deal, but now I realize it isn't. Investors are in a sense "buying" your time. Can you really put a value on your time? Your own life?
Sure, the memories were disappointing and frustrating, but I wouldn't have had it any other way. And yes, I plan to save and try it again.
EDIT: Just to be clear I'm not saying throw VC money around... of course you still need to be responsible.
Having a slack attitude towards money (our own money or others) doesn't build a business or an understanding of value that ultimately ends in a revenue stream.
It's nice of you to share you story -- I don't think many folks do. I have similar experiences (good and bad), but I think the one thing that really stands out for me is that investors are in a sense "buying" your time, not much different than consulting...... :)
Of course you need to value other people's money, but when they gave you they money they know that there were higher chances to fails than to succeed. If you did 100% of what you could have done, you have done your job. If it was easy everyone would do it.
Brilliant. I've never heard the concept of investing in a startup phrased so well.
I think I'd be much more open to funding if it was like this because I'm used to people paying me to build ideas, it just might be my own ideas that someone else happens to agree with.
Your investors would not be investors if the failure of any one of their investments would create an insufferable financial burden upon them. If that statement is not true about a particular investor, that's their fault and not yours.
Best of luck, but definitely do _not_ feel guilty.
Assuming that's true, then perhaps you'll end up with a tarnished reputation, but your life isn't crumbling apart. It shouldn't be too difficult to find a more conventional job with a decent salary, especially if you've managed to create a product that people wanted to invest in.
In the way that you sold your idea to the investor (whether it was by way of having a product to show, or just fancy talking, or a combination of both), you will have to rise from the ashes and prepare to do it again.
You can, and probably should eventually frame this as experience, because thats exactly what it is. A lot of investors will look at this as a learning experience for you, if your able to keep yourself from being rattled out of the game.
The next time around, you will be able to look back on your experience, and hopefully make different choices that will help you stay at the edge of your seat.
Lastly, sometimes ideas just don't work, despite all your best efforts. Sometimes there is little you can do to change the course of history. Often, its a combination of both bad decisions, and being in the right place at the wrong time, or the wrong place at the right time.
So you failed. Dont obsess about it. Tell your family the company is not working. Dont try an be a hero. Be honest, they appreciate that more (fuck them if the dont). Entrepreneurs have to meet these weird social standards that are never within reach. You think Warren Buffett has ever getting a break? He gets shit every day from deals gone sour.
But keep your head up. Failure is not you. You are a person, and you did pretty good. Your investor lost the money the minute he decided to play investor. Doesnt have to do anything with you.
If you want to talk about it with someone who fails hard every month, just send me an email (on profile). I wont make this public.
Also, dont be ashamed. You got to the NBA, but you were not Michael Jordan. Who cares? I bet you played a good game, and got some good stories from it. Best wishes!
Wise words indeed. One of the things that has always bugged me about certain portions of the startup culture is that over valuing of 'success'. As far as I am concerned, if you learn something from the experience, you can't fail.
An American basketball player, having not had much luck with NBA aspirations, took a job in Western Australia, playing for a state league team. These state league clubs have a player budget of about $60,000 spread across a men's team and a women's team - 20 players in total. The league in question is not likely in the top four leagues in Australia.
Said player told his hometown paper that he had a three-year deal for $1m, that he was going to be playing in the best league in Australia, that it would be on a tropical island in the West (it's mainland), that he'd get a beachfront 3BR apartment, that the club was flying him and his family the last leg on a private jet (it would've been a bus from Perth) and that his signing made news across Australia (fat chance).
His club found out about these claims, learned a bit more about his character besides this, and cut him before he'd played a game.
Or maybe he is?
http://www.youtube.com/watch?v=45mMioJ5szc
zerocool1989 3 hours ago | link [dead]
I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed. -- Michael jordan
-----
I disagree, anyone who has the balls to start something new, whether they succeed or not, is far from average.
Thanks for writing that, it resonated strongly with me for some reason.
It's also something I have heard echoed strongly in pg's recent essays on why/how/what to build as a startup.
If it's any consolation, they may be watching to see whether you just give up, or stick with it to the end. You may be surprised that they would back you again with a different idea, since you're so obviously sweating over every dollar of their money...
This sounds like a negative statement, but it actually has extremely positive repercussion: you no longer have to worry about them AND you have a few months to do whatever you want. Anything. Have fun and enjoy it. Maybe build something cool, completely new, something that you want to see exist in the world. And you never know, just letting go of the burden, accepting that what's done is done, and enjoying creating something for fun may actually lead to something.
See: http://www.physics.ohio-state.edu/~kilcup/262/feynman.html
It was hard, but I still do startups and wouldn't change that for anything.
It'll get better. Don't give up on yourself. :)
I'm sure you worked hard. Tried your best. What else can you do. If it's over, move on and get out of the current gig now. Tomorrow even. It sounds like your investors already have.
You've made sacrifices as well. Call them tomorrow, thank them for what they did, shut the door and open a new one.
How is it compared to being fired? (Being fired = you can find another job, might need to explain why you're fired to potential employer, but life goes on)
Michael Jordan
OP, hang in there and find someone you can talk about your feelings to, even if you have to keep your "confident face" on all day.
Failing that, listen to a lot of Nine Inch Nails. No, wait, that was Dotcom 1.0.
Own it. Own this failure and figure out (if you havent already) what went wrong and own it. This isn't just about damage control, this is about realizing the struggle in keeping a business a float is an asset, extracting as much data and knowledge will drive the success of your future projects.
And above all, do not let the investors forget you with a bad taste in their mouth. Own it, again. Remind them why they invested you in the first place, you never know what the future holds. Don't let it just burn up!
Everyone else (including the founders), love them -- we all ended up on our feet and were better for the whole awesome startup experience.
Until next time you succeed then, they will start following you back and talk about old days how it was fun and exciting.
Yeah, exception exists and they have a track record showing it.
The basic issue that made us decide the way we did was that accepting VC money locks you into the VC exit strategy. This means you are building either an acquisition target or a company you want to take public. If that's what you want to do, partnering with VC's makes a lot of sense. They may help you get there faster. If you aren't sure that's what you want to do there is nothing wrong with taking the first steps on your own before committing to such a strategy.
There's a second issue too, which is what I call "overfunding syndrome." The basic truth is that the vast majority of businesses will fail before they succeed. If you are funding it yourself and the like you have more options than if you are racing towards the VC exit strategy gamble. This is why bootstrapping can often be a real business saver.
I suspect we could find investors if we wanted or needed to. But the fact that we don't need to at the moment and aren't sure we want to lock ourselves into the acquisition-or-IPO cycle means for us the best option is keeping our options open. That doesn't preclude changing our minds down the road, but it is a lot easier to decide that "you know, maybe we could use venture capital after all" than it is to change one's mind and get out of the funding cycle. To my mind this is part of staying upstream of the larger problems.
We got A+ investors but we failed to deliver. We had founder breakups early on and I was made a single founder for the last two years. I ended up working twice as hard to make up for my founder's departure. (The stress and long hours actually made me less productive.) It almost killed my health and my relationship with the loved ones.
Don't take it personally. You have given your best shot and remember you have your own opportunity cost. It's a fair deal to the investors. The important thing is to handle the wind down professionally. Try to savage what you have (team or product). You or your investors may not get anything out of it but they sure would appreciate your effort.
If 'doom' is still a month or two off, but inevitable, attempt orderly wind-down. Maybe a corporate entity is bankrupt. Maybe employees need a fair warning. Maybe there are salable assets. You can ask for help, even from strangers, even non-anonymously. It will be hard to get help if still presenting a facade of "everything's great", and since the 'doom' will be public knowledge soon enough, stop pretending. Instead, use this as practice in confronting the worst and making-do as best as possible with bad options.
treat everyone with respect, honesty, and be forthright. it'll feel awful and scary, but it'll mean a lot more than if you made everyone rich, or at least helped them with some more paychecks. people will remember your character and your behavior far more than any money you made or lost for them.
i think a lot of people forget the incredible risks and burdens founders take on. i saw a quote in inc magazine that put it best, something to the effect of "if this business goes under, you lose your job, but i lose my house and maybe even more." never having founded anything i can't imagine the burden your under, but i know it's immense. that said, remember to be forthright with everyone.