> I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now.
Well I think you found your problem right there. Whether or not, they're actual idiots, this is a problem you need to address. EIther get out of it or you need to find a way to respect them.
If you can't respect your co-founders, you're gonna have trouble working with them.
I came here to post this. Ultimately he needs to work out whether or not he can talk to his co-founders or not about this. If he can't it'll tear the relationship apart and it doesn't matter whether or not the company's making or losing money, without that respect he'll have nothing but pain, tears and resentment.
This is very good advice, and there are a number of times in my career (and life, really) that I wish I had respected this mode of thinking. It didn't get through to me until I read it in a book about chess, actually. In the book the author warned that beginners get into trouble by paying attention to momentum. Instead, it suggested, it was better to look at the board each move as freshly as possible and ignore what happened to get it into that state because it was irrelevant.
More often than not, I think that's good advice for darned near everything. I'd say take a fresh look and weigh your options. If you didn't have a job right now is this the one you'd take? If not then stop! Because that's what you're doing every morning, you're taking this job for no better reason than you took it yesterday and the day before that.
Exactly. Just because you've spent the last year barely making ends meet, it doesn't mean that you have to spend another year in a similar situation.
Reassess what's important to you and go for it. You need to ensure that your own personal needs are taken care of first before others, and if that means leaving the startup behind, then so be it.
Is this anonymous copy-and-paste medium how people start to deal with their problems now? What happened to just talking to people or making tough decisions? I've seen more of these posts in the last year than I have in my entire time on HN.
I'm sorry you are having a tough time but you need to either 1) have a hard talk with your co-founders about your business model. present facts. make your case. they will listen.
or
2) if they dont, walk away and start something new. you mention you are a few years out of college. you could also go take all the technical experience you have gained over the last year and get another job. Make a decision on your own.
But really, the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd.
I don't think it is entire absurd that internet strangers can give good advice. That said, it is entirely impossible when given no actual information or goals, just a scrawling whine.
I would agree, talking with the co-founders is the best route to go. Come up with good examples and/or comparisons for why you think the business model won't be a success but also propose a solution to what route you think the business should go.
Yes, I think after 15 months you should have a serious discussion with them. It might take a few days to agree on a plan. Make it clear you need income to go forward. They're probably thinking the same thing as you anyhow.
Exactly. That's something you didn't mention in your story, and it is a crucial thing to do if you really believe that the product solves real problems. Don't let the unavoidable obstacles destroy your relationships. All of you are still learning (the brick&mortar business experience isn't that easy to transfer to tech startup) and that requires mistakes and dead-ends. You can treat your adventures so far as a lessons in Lean Startup fashion and check together if there's anything you all can improve.
> the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd
While not miracle advice, I cannot think of a better venue to ask startup-related questions. I don't know anyone in real life, none of my friends do this, etc. In contrast, a substantial portion (if not the majority?) of users here have been part of a startup, and have firsthand advice.
Sure, it's not miracle advice, but the fact that these are strangers on the internet is not sufficient to discount the wisdom that many here are willing to share.
> Is this anonymous copy-and-paste medium how people start to deal with their problems now?
Obviously this person wanted some advice on their situation while remaining anonymous. I don't see a problem with being able to engage the community without having their name attached to it until they're ready to sit down and have a frank conversation with their co-founders.
> But really, the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd.
I'm not sure how asking for advice is expecting "miracle" advice. There is a difference between the two.
> Is this anonymous copy-and-paste medium how people start to deal with their problems now?
Yeah, isn't it awesome? There are sure worse ways to deal with difficult personal questions.
How did we do it before the internet and crowdsourcing? Oh yeah, there was a column in the newspaper called "Dear Abby". For the entire American syndication, she handled about two questions a day.
> What happened to just talking to people or making tough decisions?
I think he has been 'talking to people' because they've written him some checks.
Stop wringing your hands over this and leave this venture. Don't worry about hurt feelings. Move on with your life. Get a job that brings in some income. Do it for the sake of your sanity and your relationships with loved ones.
I know how you feel. Been there, done that. Let me say that its not your fault. You went in with the best interest in succeeding, but things went south. Your focus now should be on you. Not the business, but you. You don't owe them anything. Its time you focused on what is best for you. Its obvious you want to quit. Do so. Whatever happens, cannot be worse than what you are going through right now. Don't trap yourself into thinking about what if the company succeeds after you leave. Its not worth it. You can't continue living like this, in hopes of a better future. Truth is, the company has a slim chance of succeeding. And without you, it has less of a chance. So quit. Move on. Get your health back in order, and get a well paying job as a programmer. (look for the hiring thread on HN, or at indeed.com). Remember, money is nothing without health. You must be mentally healthy in order to be able to enjoy it. If anything, just shoot me an email. I will gladly listen to you. Best wishes.
Try and fix the problems yourself. If the problems are fixable, I'm sure you have insight into how to fix them. There's obviously something wrong with the situation.
If you can't fix the problems, leave. Don't fall into a sunken cost fallacy. Sometimes losing time and/or money is just a part of doing business. You took a risk. Risk is a part of life. But you should also learn to recognize when to cut losses and move on. You should sit down, decide upon what it will take for you to leave the company, and stick to the decision if it comes to pass.
I am making a some assumptions in this advice I'm giving you. You should get out, I understand you have invested the time and effort. But if they can't carry their weight, there is a lot of potential risk for the future.
"I think my co-founders are idiots". What are your expectations of them for the future. Do you see them becoming geniuses? Staying in with the expectations that a bad player will become a good player is an insane risk for you.
If this start-up becomes big, how stake in the company are divided will become a huge pain point. They are going to want more than they deserve. I've been around plenty of people who are all talk and heard many horror stories. I'm fortunate not to be burned but I've made a strong effort to surrounded myself with the right people. I'm telling you this to minimize mistakes that may take a huge portion of your time. Time is the most valuable thing you have so spend it on projects and people that are worth it.
> I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now.
You've got to let go of this attitude. If you cling to it, then you will never leave, even if your co-founders are idiots and the business is a failure. What you need to do is quit as soon as possible. Only then can you start on a better endeavor and improve your quality of life.
I once heard someone say, "Give up on crap." It may sound juvenile, and it goes against the rosy, feel-good "Never give up" pep talks that we're used to and almost expect to hear. But I've found it to be a much better guide in life decisions. Go with it.
But if you think about it, you're probably going to need to work with them for a long while if you stay. So it's not the best idea to stay any longer if you don't respect your team.
This, to me, is most valid point. Even if the company does start putting cash in your wallet, if you don't believe in it, or the people leading it, or their business model, you're not going to be happy.
It's easy to presume that sunk costs should have no weight when considering the relative value of different options.
For many endeavours a certain amount of investment is required before returns are seen - investments in time and money in particular. For this reason there is almost always a cost to be considered switching between endeavours.
So, while I agree that throwing good money after bad is a silly thing to do, the consideration should be how much more investment is needed to make this endeavour profitable vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
You shouldn't weight how much has already been spent in this consideration, however you have to understand the impact existing investment has had on the road to profitability.
Time and money already spent is a crude metric that lends itself to the Sunk Cost Fallacy, but considering the metric is not the same thing as falling victim to the fallacy.
[EDIT] The following comment explains this really well through an example:
I think you misunderstand sunk cost. Sunk cost basically just says to always employ a purely-forward-looking strategy when evaluating costs and benefits.
> vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
Wait, what are these two costs? Aren't they the same? Where did the cost of switching come from?
> I think you misunderstand sunk cost. Sunk cost basically just says to always employ a purely-forward-looking strategy when evaluating costs and benefits
I don't think I misunderstand sunk cost, but perhaps I didn't explain my point well enough.
I agree that you need to be forward looking, but whilst looking forward it can be important to consider existing investment. Existing investment is not ALWAYS worth nothing, so its value needs to be accounted for. Existing investment is also a metric that, whilst lending itself to entwining one in the Sunk Cost Fallacy, is an important part of answering the question "how much more investment is needed?"
The sunk cost fallacy applies in a situation where previous investment has been lost. The typical example is in gambling, where each spin of the wheel is independent of how much you have already lost on the table. When in a startup, however, previous investment is not necessarily lost, so switching to a new one is (typically) not the same as continuing one you have already invested in.
>> vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
> Wait, what are these two costs? Aren't they the same? Where did the cost of switching come from?
The cost of switching is a way of characterising things like lost earnings and payouts that are not directly related to starting a new endeavour. They are typically, though not always, constant regardless of the new endeavour being considered, and so it makes sense to keep them separate.
Examples of switching costs:
* paying out a phone contract;
* loss of long service benefits (if someone is close to receiving long service benefits they will typically wait to receive them before switching jobs);
Are you disagreeing that investment is often needed in order to gain profit?
I definitely did not advocate gambling money away, but rather that "an objective view of the situation" requires you "to understand the impact existing investment has had on the road to profitability."
In a follow up to another comment in this thread, I specifically call out the difference between gambling, where (usually) any investment so far has no impact on future earnings; and investing (in particular investing in startups), where the time and money invested so far can have an impact on future earnings.
To be concrete, the next spin of the roulette table has no correlation to the amount of money you won or lost on the previous spin, but your chance of selling an app on the app store in the next month is directly correlated to how much of the app has been written already.
There's only one co-founder you can't get rid of. I've tried! (I haven't tried the obvious method, if only because it isn't obviously effective for this problem.)
I left a start up despite dumping countless hours into it. I just didn't see it really going anywhere because our business side just wasn't well fleshed out and I knew I'd never really have the control I wanted based on the personality of the other founder.
A year later he's still at it and has made no progress. I gave up my founder's share for a more modest share. If the company ever goes anywhere I'll take my paycheck, but at this point I just consider that time to be a financial loss.
There are many ways to leave a company and still maintain the possibility for a payout for your work if it ever comes to that. If they're the types that would try to screw you over when you leave, then you probably should have left a while ago.
I agree with you. Plus we don't know the real story or from the other (the co-fos) points of view, it's hard to decide who are the real idiots, or to put it softly, who are the real masterminds. Especially being a founder, being able to work with any kinds of people is a must.
"...I feel as though I've invested too much time and energy to bail now."
Unless you feel there's a realistic chance of success within the timeframe that your personal situation allows, you should bail. Don't let the past trap your future.
"I've learned more in the last year than I have at any other point in my life, and I've become a better programmer and designer. I've always said that even if this doesn't work out, I'll have become a better, more capable professional in the end. And I feel that I have."
And you no doubt are! I'm not sure where you are, but there are tons of companies in SF/Silicon Valley with 6-50 employees, VC funding, etc that will pay relocation and a nice salary for a versatile full-stack developer with demonstrable skills. There may be a startup in the future, but there's no shame in using the skills you developed at this startup to get a nice job for a year or two. The choice isn't between BigCo and no salary frustrationsville.
This is exactly what I wanted to say in response to his penultimate question:
"I can't imagine working for a big corporation again, but should I just give it up and get a "normal" job for a little while to build up some savings again before embarking on the next venture?"
There are plenty of small venture-backed startups that will pay you a good salary if you have the right skills. You just need to find the right fit.
Did you think that the non-tech people you picked would be great co-founders at the time (whom you now consider idiots)? Or did you think that they'd be useful in getting funding (which they failed to do anyway)?
You say that you've become a better programmer, and are proud of your product. It's the business model that stinks, right? If product is all you care about, why aren't you working on an open source project? You'll constantly get developer reviews and user feedback and can build a truly fantastic product. If business model/ funding is secondary ("let's just pull in a couple of idiots who'll take care of it for me"), you really shouldn't be starting up.
Okay, you're already here and want to know what to do now. Cut your losses and get out. Now. Get your shit together and figure out what you want to do.
Play this thought experiment in your head. Imagine:
1. you have not been involved in this company
2. you are approached to take over in the technical role given where it is
What are your thoughts?
Are you interested in participating.
It's a typical "sunk cost" decision.
From the tone of your note I would guess you would answer you should leave.
I was in a very similar situation, I built a web-app pretty much exactly as my biz partners needed; I spent probably 15 months writing it. I put everything into this venture, I lived on my savings and drained my 401ks as a last ditch effort hoping things would turn around.
Guess what, never happened. My partners were idiots, they didn't want to do anything I suggest. I told them about TechStars Boulder at the start some 2.5 years ago now (I live in Denver), they didn't like the sound of it, didn't like having to give away equity for 'nothing in return'. Now, 2+ years later, the one remaining Biz partner wanted to do TechStars, is leaving his day job to put everything into this. I told him I simply couldn't take the time off to do it now, that time had past, I have a new fulltime job I love and there is no way I'd jeopardize it for our startup now (turns out he applied and we were turned down anyway, probably for the best).
Unfortunately sometimes you just have the wrong partner(s), it's as simply as that. Why not get a full-time job and go into maintenance mode ont the startup? That's basically what I finally did. I told my remaining partner I can't live like this anymore, barely scraping by and that I was going to get a fulltime job and commit to them 100%. I will still fix bugs but as far as new features go, I simply tell him I won't add anything until he signs up 10 new accounts and pays me for my time now. Hasn't happened yet and he's been trying for about 6 months now focused on the business trying to sell accounts.
Be honest with them and tell them you can't live like this any more, you've kept your end of the deal, they are welcome to soldier on but you have your own responsibilities to take care of. You'll gladly help maintain what has been built, fix bugs and do what you can outside your normal 9-5 job, but otherwise you are going to have to focus on what's best for you and your family. If they are good people they will understand, if they are not, then you've done all you can and should feel fine with moving on and doing what you need to do.
This situation is actually very simple, don't let it feel overcomplicated:
Tell them you need an actual salary and actual health insurance in the next 30 days. If the venture can pay you to keep at it, that's great. Otherwise you'll have to start looking around for a real job in a couple of weeks. Even the most brick-and-mortar type of businessperson will completely understand this.
Stick to your schedule. It will either work out or it won't.
Well, right, but what if that payment never comes? At what point do you say, "I will not make money here, I need to get a job to support myself?" When the company closes its doors (supposing it even has an office)?
Just to echo this: I was in a similar situation and did this (though without asking for healthcare) and it was the best decision I made throughout the course of the experience. Everything crystalized pretty quickly that they didn't have a plan to pay me and I was able to get out without burning through the rest of my bank account.
Indeed. People generally understand when you tell them "I can't afford to live without a paycheck."
Ignore the rest of the things you're worried about, don't say anything about serious doubts or that you think they are idiots, just let them know it's not a viable for you to continue to work without pay. Keep it simple.
To not comment on the rest, since it's highly dependent on your personal situation:
"I feel as though I've invested too much time and energy to bail now."
This is a very dangerous way to think about it. This is your life you're investing here.
Perhaps to break it down to oversimplified but still valuable math:
(probability of success)*(personal outcome) = expected outcome
If you think they have a 10% chance of succeeding, but if they do they'll be legitimately worth $10M of which you'll get 30%, then the expectation value is $300k.
Do that calculation based on the numbers that you personally feel are correct. Compare to what you'd be making doing something else. Take into account that you've already worked on it for a year and a half, which is probably at least worth $100k. More since you may never get it.
If the project can't even meet that minimal standard for being worth your time, then you're unlikely to even make what you deserve for your time, much less receive a reward commensurate with your risk.
Better yet, here's a very relevant piece that tells you how to overcome the mental impediment to rationally considering situations with sunk costs involved. Basically, think about what you have to gain by changing things, rather than what you've already lost.
I remember working at a start-up and realizing what a huge portion of my personal wealth was stuck in it, and that I couldn't just quit.
Eventually I did quit, and everything was okay.
If this is your second job ever, then it's natural that you feel like this job represents a huge portion of your life's work. That's only true in that it represents your life's work up to that point. When you are 60, this will be something you see as a tiny portion of your work life. Eventually when you list the things you are most technically proud of (which you said you are), this probably won't make the top 5, because you will make so many more awesome things over the course of your career.
There was a play on Radio 4 a while back, where a guy orders a sandwich but it never arrives. Deciding that leaving would mean wasting the hour he's already waited, he stays in the cafe for years, waiting for the sandwich to arrive.
Read 'Eric Ries - The Lean Startup'. Your time at this startup is not necessarily wasted, if you've learnt stuff, networked, and somehow helped you get your next job.
> I feel as though I've invested too much time and energy to bail now.
I'm currently reading through "What I wish I knew when I was 20" by Tina Seelig (more entrepreneur-y than expected, but pretty good) and this exact topic is discussed in Chapter 5.
> […] “even great ideas require a tremendous amount of work to reach a successful outcome, it’s incredibly hard to know when to keep pushing on a problem, hoping for a breakthrough, and when to walk away. We all know that persistence is to be admired, but when does it become foolish to continue working on something that’s never going to fly? Gil Penchina, CEO of Wikia, describes the dilemma wonderfully: “If you throw gasoline on a log, all you get is a wet log. But if you throw gasoline on a small flame, you get an inferno.” That is, it’s important to know whether you’re putting energy into something that has the potential to pay off. This is one of life’s biggest challenges. We often stay in dead-end situations way too long. This occurs when companies commit to a doomed product or project, or when individuals stay with jobs or in relationships that make them miserable, hoping the situation will improve.
So how do you know when to quit? This is a huge philosophical question. It’s always a mammoth challenge to separate your desire to make something work from the reality of the probability that it will work. Of course, the more you put into a project, the more likely it is to succeed. But some efforts will never pan out, no matter how much time, money, or sweat is injected. The most scientific answer I’ve found is, listen to your gut and look at your alternatives. Essentially, you have to negotiate honestly with yourself. Do you have the fortitude to push through the problems in front of you to reach a successful outcome, or are you better off taking another path?
> So quitting is hard—but it’s even harder to do it well. I’ve seen people quit gracefully and others quit so clumsily that they leave a huge crater in their wake. As discussed in detail in chapter 8, you are likely to bump into the same people again and again in life, often in unexpected ways. This alone is reason enough to make sure that when you quit, you do so with careful thought about the consequences for those around you. Besides the impact that quitting gracefully might have on you later, it is just the right thing to do. You can never rationalize quitting in such a way that you hurt your colleagues, friends, or former business.
> A colleague told me about his assistant, who was doing a terrific job. He gave her great reviews and spent a lot of time talking with her about her career path within his group. She made it clear that ultimately she hoped to move into a different field, and my colleague was supportive of this. In fact, he told her he would be delighted to serve as a reference for her anytime. With this as a backdrop, my colleague couldn’t have been more surprised when his assistant came in one day and gave two weeks’ notice. The team was in the midst of a huge project, the deadline three weeks away. She was going to leave one week before the project was completed, putting the entire team in a very difficult position. My colleague asked her several times if she would consider staying one more week to help him get to the end of the project, which involved dozens of people directly and several thousands indirectly. She refused, saying, “I know you’re going to be unhappy that I’m leaving no matter when I go, so I decided to do what I want.”
> My colleague felt as though he’d been kicked in the stomach. It was nearly impossible to fill in the holes she left during the last week of the project, and everyone worked around the clock to try to fill the void. All those who worked with her will remember that decision. Despite the fact that she did a terrific job while she was with them, the damage she did to her reputation during the last weeks of her employment dwarfed all the positive things she had done in prior years.
In sharp cont...
If you've truly lost faith in the founders and business -- which you have -- you should leave now & cut your losses. It's not going to work out, regardless of salary.
As for how to make money after you leave -- get a job or find consulting work. Then jump back into starting a business when you're ready again.
I agree totally but i will add one more option based on this quote "I believe in our product, but I don't believe in our business model." If this is the case and assuming u have nailed a customer pain point down since its been 15 months, i would suggest that you leave and execute the same idea with the business model you believe will work. If you and the VC are on the same page and these guys don't have much tech experience then they are clearly failing to execute and no salary, health insurance, free lunch is going to make you happy. Since at the end, they are still driving you into a ditch. If no other VC's want to bite then scrap the idea.
Since you already are doing consulting on the side, i think you may be able to squeeze 3 months in on trying to get funding, just make every action Fast, Focused and Fundamental to your objectives. Godspeed!
It seems like you would be opening yourself up to lawsuits if you take this course of action and are successful. Not that I might not do it if I believed in something, but I'd want to be very careful.
If you're out of money it might be hard to pull this off as I've heard seeking funding is a full time job (or two, as your cofounders have shown) so the product has to be mostly good to go (for at least the time being) if that's going to work.
Using the product you already built with company funds is almost definitely off limits (IANL), so I'm not quite sure how that strategy could be feasible.
Don't leave until you've clarified your equity stake and dotted all your Is and crossed all of your Ts. However, you should then cut your losses and get out of there. Half of a job is with whom you work and you've learned a great lesson with 'idiot' detection. I've worked with assholes recently, and they can actually be amazing assets at a company, but about 10 years ago I stopped working with idiots and I haven't looked back.
I'm starting a cloud company in Nairobi if you want to do something totally crazy ....
Sod the legals, walk away, write it up to experience, re-tailor your CV and suck up a "proper" job (try looking for smaller companies through friends) for a year.
Talk to the people you meet and a new startup will come your way before that year's out.
How are you going to make people pay for the clouds? Is this government-sponsored? Otherwise it sounds really cool, I've seen such climate improvement projects before, but I thought they require a huge scale (entire or several countries), can a single company really make a significant impact?
After seeing some downvotes, etc., I'm starting to think you mean a hosting company... Maybe the mention of Nairobi, Kenya made me think of clouds-as-in-water-vapor :)
I believe this is excellent advice you got here. Nothing much to add but that you take your girlfriend and go somewhere for at least a week or so, to clear your mind. Go to some national park or something like that where you would be disconnected, talk to her and not just about you, hear what she is seeing and thinking.
I am pretty certain when you come back you would know much better what to do.
The bottom line is that we all have bills to pay. Get a consulting or contract job and continue with the venture in your spare time until either the founders raise enough investment money to pay your salary or you decide they won't be able to pull it off.
Be open and honest - just tell them that you need a salary. Going a year and a half with no salary is not something anybody has a right to expect from you unless you're already wealthy.
I've actually been in a very similar situation. I asked for the salary knowing they couldn't pay it and figuring it was my easiest way out without feeling like the bad guy. Hey, I just needed money and they couldn't pay it...Low and behold they unexpectedly accepted my offer. Good news, right? Not really...I wasn't happy, and after getting the salary I felt even more stuck than I was before. Get out while you still can.
Never ever ever EVER take non-science/engineer as co-founders. EVER.
I'm actually inclined to say not to hire either until you're profitable. Unless it's necessary by evil, like lawyers.
And by non-science, also include cultural science or political science.
You're being downvoted but I can definitely see where you're coming from. In the case of the OP, those two family member seem to actually exploit him pretty heavily, or at least they're not placing any actual value on him. I think a case could be made that non-technical co-founders are often prone to this kind of behavior, while the technical founder is slaving away and being called "just our IT guy". For most online startups, tech is actually an integral part of the execution, not something tedious that needs to be tacked on by some exchangeable and exploitable programmer.
I remember when we founded our first startup, it was three guys: the programmer (me), the business guy (a friend of mine), and our "account man" (an acquaintance of ours) - all equal shareholders. Shortly after founding, there was a discussion about having company cars. The two business guys wanted BMWs, and I was to get some cheap Japanese mini car. When I asked how they came to that idea, they explained that I was only the programmer and I could get by with basically nothing, whereas they insisted they needed BMWs for their role in the company. They also said, and I kid you not, that they were from wealthy families and I was not, so it seemed reasonable to them that everybody needed to keep their rightful place. Needless to say, I shot this down and shortly afterwards, the account guy left. It was for the best. Who knows what would have happened if I had let them get away with this.
Self-entitled, hypocritical, non-technical entrepreneurs. There are probably a lot of good people with non-technical qualifications out there, but it's easy to suddenly find yourself working with the bad ones.
That's a bad experience, but it could easily go the other way, eg. a technical person taking advantage of a non-technical founder. The key is trust, regardless of the personalities involved. Trust, but validate as the saying goes.
Can you make an amicable exit with some rights to the code? Seeing as you haven't been properly paid the copyrights or even the non-exclusive rights to it could be a fair exit and you say that you are proud of the technical solution. It's only relly worth it if you can see a business in it though or can pivot the work you have done.
It sounds like you have had an expensive lesson in picking partners, try to exit as cheaply as possible where the costs factored in include family relationships as well as your time. Others may also see the end but not want to be the one to call it but it is worth having a story for what you will do instead.
As others say forget about the sunk costs just optimise for the current situation and the future.
I don't have any first hand experience with your issue, so take what I say with that in mind.
Looking ahead, you don't like your plan or your partners. I don't know how much of the IP is yours legally, but you can try to find a new partner or work on your own if you strongly believe in the product.
If you want to quit and don't want a "normal" job, consider going back to school. You might be able to quickly patch some holes in your education and meet potential cofounders for new projects.
One quote I like: "when all else is lost, the future remains." Good luck!
You need to determine if the product/idea is actually viable and the problem is in fact that the other founders are failing to execute, or
the is is something inherently flawed with the business model. Have some entrepreneurs or VCs you trust and respect review the business and give you their opinion.
If the problem is the other founders, you could start talking with them about bringing on someone to turn the company around or about selling the company to someone else.
If the problem is the idea/product/business model, you should move on ASAP.
In either case, if there is some useful technology that can be repurposed for another idea/business, make sure you get a unlimited license or if the company folds, take ownership the IP assets as back unpaid salary.
Make sure you get the transfer of IP in writing, ideally reviewed by a lawyer. If you do build something successful with the IP, you don't want "the idiots" coming around and claiming they own part of it.
Alright homey, been in nearly your exact shoes- echoing the remarks of others here's what you do: OUT OUT OUT OUT OUT
You've been sold a bill of goods and it hasn't delivered, these startup ventures in some ways are "supposed" to hurt a bit but not like this. Get out yesterday and be firm with your decision.
It is soooo much easier said than done (esp on an internet forum) but here's a coping mechanism: 1) remember you absolutely do not need to line up another gig in order to leave this one- this sounds like a loser/sucker bet and you can fall back on side gigs; 2)The "family" aspect makes things tricky but luckily you can work or not work wherever you damn please.
The crucial thing is to stop the hemorrhaging ASAP, get the hell out pronto.
Caveat: Even if they come up with a way to pay you a BS-y salary, without knowing the specifics of this situation, from what you describe I still say it's time to hit the road and get on with your life and other ventures.
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[ 429 ms ] story [ 3626 ms ] threadWell I think you found your problem right there. Whether or not, they're actual idiots, this is a problem you need to address. EIther get out of it or you need to find a way to respect them.
If you can't respect your co-founders, you're gonna have trouble working with them.
You're talking about sunk costs. There's nothing you can do about that now. Focus on the future. Think about your future time and energy.
http://en.wikipedia.org/wiki/Sunk_costs
More often than not, I think that's good advice for darned near everything. I'd say take a fresh look and weigh your options. If you didn't have a job right now is this the one you'd take? If not then stop! Because that's what you're doing every morning, you're taking this job for no better reason than you took it yesterday and the day before that.
Reassess what's important to you and go for it. You need to ensure that your own personal needs are taken care of first before others, and if that means leaving the startup behind, then so be it.
I'm sorry you are having a tough time but you need to either 1) have a hard talk with your co-founders about your business model. present facts. make your case. they will listen.
or
2) if they dont, walk away and start something new. you mention you are a few years out of college. you could also go take all the technical experience you have gained over the last year and get another job. Make a decision on your own.
But really, the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd.
While not miracle advice, I cannot think of a better venue to ask startup-related questions. I don't know anyone in real life, none of my friends do this, etc. In contrast, a substantial portion (if not the majority?) of users here have been part of a startup, and have firsthand advice.
Sure, it's not miracle advice, but the fact that these are strangers on the internet is not sufficient to discount the wisdom that many here are willing to share.
Obviously this person wanted some advice on their situation while remaining anonymous. I don't see a problem with being able to engage the community without having their name attached to it until they're ready to sit down and have a frank conversation with their co-founders.
> But really, the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd.
I'm not sure how asking for advice is expecting "miracle" advice. There is a difference between the two.
Yeah, isn't it awesome? There are sure worse ways to deal with difficult personal questions.
How did we do it before the internet and crowdsourcing? Oh yeah, there was a column in the newspaper called "Dear Abby". For the entire American syndication, she handled about two questions a day.
> What happened to just talking to people or making tough decisions?
I think he has been 'talking to people' because they've written him some checks.
If you can't fix the problems, leave. Don't fall into a sunken cost fallacy. Sometimes losing time and/or money is just a part of doing business. You took a risk. Risk is a part of life. But you should also learn to recognize when to cut losses and move on. You should sit down, decide upon what it will take for you to leave the company, and stick to the decision if it comes to pass.
"I think my co-founders are idiots". What are your expectations of them for the future. Do you see them becoming geniuses? Staying in with the expectations that a bad player will become a good player is an insane risk for you.
If this start-up becomes big, how stake in the company are divided will become a huge pain point. They are going to want more than they deserve. I've been around plenty of people who are all talk and heard many horror stories. I'm fortunate not to be burned but I've made a strong effort to surrounded myself with the right people. I'm telling you this to minimize mistakes that may take a huge portion of your time. Time is the most valuable thing you have so spend it on projects and people that are worth it.
You've got to let go of this attitude. If you cling to it, then you will never leave, even if your co-founders are idiots and the business is a failure. What you need to do is quit as soon as possible. Only then can you start on a better endeavor and improve your quality of life.
I once heard someone say, "Give up on crap." It may sound juvenile, and it goes against the rosy, feel-good "Never give up" pep talks that we're used to and almost expect to hear. But I've found it to be a much better guide in life decisions. Go with it.
Look up Sunk Cost Fallacy.
Also this related episode of Freakonomics is great: http://www.freakonomics.com/2011/09/30/new-freakonomics-radi...
For many endeavours a certain amount of investment is required before returns are seen - investments in time and money in particular. For this reason there is almost always a cost to be considered switching between endeavours.
So, while I agree that throwing good money after bad is a silly thing to do, the consideration should be how much more investment is needed to make this endeavour profitable vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
You shouldn't weight how much has already been spent in this consideration, however you have to understand the impact existing investment has had on the road to profitability.
Time and money already spent is a crude metric that lends itself to the Sunk Cost Fallacy, but considering the metric is not the same thing as falling victim to the fallacy.
[EDIT] The following comment explains this really well through an example:
https://news.ycombinator.com/item?id=5722032
> vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
Wait, what are these two costs? Aren't they the same? Where did the cost of switching come from?
I don't think I misunderstand sunk cost, but perhaps I didn't explain my point well enough.
I agree that you need to be forward looking, but whilst looking forward it can be important to consider existing investment. Existing investment is not ALWAYS worth nothing, so its value needs to be accounted for. Existing investment is also a metric that, whilst lending itself to entwining one in the Sunk Cost Fallacy, is an important part of answering the question "how much more investment is needed?"
The sunk cost fallacy applies in a situation where previous investment has been lost. The typical example is in gambling, where each spin of the wheel is independent of how much you have already lost on the table. When in a startup, however, previous investment is not necessarily lost, so switching to a new one is (typically) not the same as continuing one you have already invested in.
>> vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
> Wait, what are these two costs? Aren't they the same? Where did the cost of switching come from?
The cost of switching is a way of characterising things like lost earnings and payouts that are not directly related to starting a new endeavour. They are typically, though not always, constant regardless of the new endeavour being considered, and so it makes sense to keep them separate.
Examples of switching costs:
* paying out a phone contract;
* loss of long service benefits (if someone is close to receiving long service benefits they will typically wait to receive them before switching jobs);
* non-compete clauses.
I definitely did not advocate gambling money away, but rather that "an objective view of the situation" requires you "to understand the impact existing investment has had on the road to profitability."
In a follow up to another comment in this thread, I specifically call out the difference between gambling, where (usually) any investment so far has no impact on future earnings; and investing (in particular investing in startups), where the time and money invested so far can have an impact on future earnings.
To be concrete, the next spin of the roulette table has no correlation to the amount of money you won or lost on the previous spin, but your chance of selling an app on the app store in the next month is directly correlated to how much of the app has been written already.
A year later he's still at it and has made no progress. I gave up my founder's share for a more modest share. If the company ever goes anywhere I'll take my paycheck, but at this point I just consider that time to be a financial loss.
There are many ways to leave a company and still maintain the possibility for a payout for your work if it ever comes to that. If they're the types that would try to screw you over when you leave, then you probably should have left a while ago.
You might be able to convince them to pay you out for your share of the equity.
Unless you feel there's a realistic chance of success within the timeframe that your personal situation allows, you should bail. Don't let the past trap your future.
"I've learned more in the last year than I have at any other point in my life, and I've become a better programmer and designer. I've always said that even if this doesn't work out, I'll have become a better, more capable professional in the end. And I feel that I have."
And you no doubt are! I'm not sure where you are, but there are tons of companies in SF/Silicon Valley with 6-50 employees, VC funding, etc that will pay relocation and a nice salary for a versatile full-stack developer with demonstrable skills. There may be a startup in the future, but there's no shame in using the skills you developed at this startup to get a nice job for a year or two. The choice isn't between BigCo and no salary frustrationsville.
"I can't imagine working for a big corporation again, but should I just give it up and get a "normal" job for a little while to build up some savings again before embarking on the next venture?"
There are plenty of small venture-backed startups that will pay you a good salary if you have the right skills. You just need to find the right fit.
You say that you've become a better programmer, and are proud of your product. It's the business model that stinks, right? If product is all you care about, why aren't you working on an open source project? You'll constantly get developer reviews and user feedback and can build a truly fantastic product. If business model/ funding is secondary ("let's just pull in a couple of idiots who'll take care of it for me"), you really shouldn't be starting up.
Okay, you're already here and want to know what to do now. Cut your losses and get out. Now. Get your shit together and figure out what you want to do.
What are your thoughts? Are you interested in participating.
It's a typical "sunk cost" decision. From the tone of your note I would guess you would answer you should leave.
Guess what, never happened. My partners were idiots, they didn't want to do anything I suggest. I told them about TechStars Boulder at the start some 2.5 years ago now (I live in Denver), they didn't like the sound of it, didn't like having to give away equity for 'nothing in return'. Now, 2+ years later, the one remaining Biz partner wanted to do TechStars, is leaving his day job to put everything into this. I told him I simply couldn't take the time off to do it now, that time had past, I have a new fulltime job I love and there is no way I'd jeopardize it for our startup now (turns out he applied and we were turned down anyway, probably for the best).
Unfortunately sometimes you just have the wrong partner(s), it's as simply as that. Why not get a full-time job and go into maintenance mode ont the startup? That's basically what I finally did. I told my remaining partner I can't live like this anymore, barely scraping by and that I was going to get a fulltime job and commit to them 100%. I will still fix bugs but as far as new features go, I simply tell him I won't add anything until he signs up 10 new accounts and pays me for my time now. Hasn't happened yet and he's been trying for about 6 months now focused on the business trying to sell accounts.
Be honest with them and tell them you can't live like this any more, you've kept your end of the deal, they are welcome to soldier on but you have your own responsibilities to take care of. You'll gladly help maintain what has been built, fix bugs and do what you can outside your normal 9-5 job, but otherwise you are going to have to focus on what's best for you and your family. If they are good people they will understand, if they are not, then you've done all you can and should feel fine with moving on and doing what you need to do.
Tell them you need an actual salary and actual health insurance in the next 30 days. If the venture can pay you to keep at it, that's great. Otherwise you'll have to start looking around for a real job in a couple of weeks. Even the most brick-and-mortar type of businessperson will completely understand this.
Stick to your schedule. It will either work out or it won't.
If it doesn't, no hard feelings.
If you're anything like me, this incredibly stressful time will end up materially pushing your career forward in the future.
Source: been there, lots
Ignore the rest of the things you're worried about, don't say anything about serious doubts or that you think they are idiots, just let them know it's not a viable for you to continue to work without pay. Keep it simple.
"I feel as though I've invested too much time and energy to bail now."
This is a very dangerous way to think about it. This is your life you're investing here.
Perhaps to break it down to oversimplified but still valuable math:
(probability of success)*(personal outcome) = expected outcome
If you think they have a 10% chance of succeeding, but if they do they'll be legitimately worth $10M of which you'll get 30%, then the expectation value is $300k.
Do that calculation based on the numbers that you personally feel are correct. Compare to what you'd be making doing something else. Take into account that you've already worked on it for a year and a half, which is probably at least worth $100k. More since you may never get it.
If the project can't even meet that minimal standard for being worth your time, then you're unlikely to even make what you deserve for your time, much less receive a reward commensurate with your risk.
[1]: http://www.lifehack.org/articles/communication/how-the-sunk-...
[2]: http://en.wikipedia.org/wiki/Sunk_costs
http://www.theatlantic.com/health/archive/2013/05/how-to-wal...
Eventually I did quit, and everything was okay.
If this is your second job ever, then it's natural that you feel like this job represents a huge portion of your life's work. That's only true in that it represents your life's work up to that point. When you are 60, this will be something you see as a tiny portion of your work life. Eventually when you list the things you are most technically proud of (which you said you are), this probably won't make the top 5, because you will make so many more awesome things over the course of your career.
Read 'Eric Ries - The Lean Startup'. Your time at this startup is not necessarily wasted, if you've learnt stuff, networked, and somehow helped you get your next job.
I'm currently reading through "What I wish I knew when I was 20" by Tina Seelig (more entrepreneur-y than expected, but pretty good) and this exact topic is discussed in Chapter 5.
> […] “even great ideas require a tremendous amount of work to reach a successful outcome, it’s incredibly hard to know when to keep pushing on a problem, hoping for a breakthrough, and when to walk away. We all know that persistence is to be admired, but when does it become foolish to continue working on something that’s never going to fly? Gil Penchina, CEO of Wikia, describes the dilemma wonderfully: “If you throw gasoline on a log, all you get is a wet log. But if you throw gasoline on a small flame, you get an inferno.” That is, it’s important to know whether you’re putting energy into something that has the potential to pay off. This is one of life’s biggest challenges. We often stay in dead-end situations way too long. This occurs when companies commit to a doomed product or project, or when individuals stay with jobs or in relationships that make them miserable, hoping the situation will improve. So how do you know when to quit? This is a huge philosophical question. It’s always a mammoth challenge to separate your desire to make something work from the reality of the probability that it will work. Of course, the more you put into a project, the more likely it is to succeed. But some efforts will never pan out, no matter how much time, money, or sweat is injected. The most scientific answer I’ve found is, listen to your gut and look at your alternatives. Essentially, you have to negotiate honestly with yourself. Do you have the fortitude to push through the problems in front of you to reach a successful outcome, or are you better off taking another path?
> So quitting is hard—but it’s even harder to do it well. I’ve seen people quit gracefully and others quit so clumsily that they leave a huge crater in their wake. As discussed in detail in chapter 8, you are likely to bump into the same people again and again in life, often in unexpected ways. This alone is reason enough to make sure that when you quit, you do so with careful thought about the consequences for those around you. Besides the impact that quitting gracefully might have on you later, it is just the right thing to do. You can never rationalize quitting in such a way that you hurt your colleagues, friends, or former business.
> A colleague told me about his assistant, who was doing a terrific job. He gave her great reviews and spent a lot of time talking with her about her career path within his group. She made it clear that ultimately she hoped to move into a different field, and my colleague was supportive of this. In fact, he told her he would be delighted to serve as a reference for her anytime. With this as a backdrop, my colleague couldn’t have been more surprised when his assistant came in one day and gave two weeks’ notice. The team was in the midst of a huge project, the deadline three weeks away. She was going to leave one week before the project was completed, putting the entire team in a very difficult position. My colleague asked her several times if she would consider staying one more week to help him get to the end of the project, which involved dozens of people directly and several thousands indirectly. She refused, saying, “I know you’re going to be unhappy that I’m leaving no matter when I go, so I decided to do what I want.”
> My colleague felt as though he’d been kicked in the stomach. It was nearly impossible to fill in the holes she left during the last week of the project, and everyone worked around the clock to try to fill the void. All those who worked with her will remember that decision. Despite the fact that she did a terrific job while she was with them, the damage she did to her reputation during the last weeks of her employment dwarfed all the positive things she had done in prior years. In sharp cont...
If you've truly lost faith in the founders and business -- which you have -- you should leave now & cut your losses. It's not going to work out, regardless of salary.
As for how to make money after you leave -- get a job or find consulting work. Then jump back into starting a business when you're ready again.
Since you already are doing consulting on the side, i think you may be able to squeeze 3 months in on trying to get funding, just make every action Fast, Focused and Fundamental to your objectives. Godspeed!
If you're out of money it might be hard to pull this off as I've heard seeking funding is a full time job (or two, as your cofounders have shown) so the product has to be mostly good to go (for at least the time being) if that's going to work.
Using the product you already built with company funds is almost definitely off limits (IANL), so I'm not quite sure how that strategy could be feasible.
I'm starting a cloud company in Nairobi if you want to do something totally crazy ....
Talk to the people you meet and a new startup will come your way before that year's out.
I am pretty certain when you come back you would know much better what to do.
Be open and honest - just tell them that you need a salary. Going a year and a half with no salary is not something anybody has a right to expect from you unless you're already wealthy.
And by non-science, also include cultural science or political science.
I remember when we founded our first startup, it was three guys: the programmer (me), the business guy (a friend of mine), and our "account man" (an acquaintance of ours) - all equal shareholders. Shortly after founding, there was a discussion about having company cars. The two business guys wanted BMWs, and I was to get some cheap Japanese mini car. When I asked how they came to that idea, they explained that I was only the programmer and I could get by with basically nothing, whereas they insisted they needed BMWs for their role in the company. They also said, and I kid you not, that they were from wealthy families and I was not, so it seemed reasonable to them that everybody needed to keep their rightful place. Needless to say, I shot this down and shortly afterwards, the account guy left. It was for the best. Who knows what would have happened if I had let them get away with this.
Self-entitled, hypocritical, non-technical entrepreneurs. There are probably a lot of good people with non-technical qualifications out there, but it's easy to suddenly find yourself working with the bad ones.
It sounds like you have had an expensive lesson in picking partners, try to exit as cheaply as possible where the costs factored in include family relationships as well as your time. Others may also see the end but not want to be the one to call it but it is worth having a story for what you will do instead.
As others say forget about the sunk costs just optimise for the current situation and the future.
this is all in your head and they're using it to keep leverage over you.
Looking ahead, you don't like your plan or your partners. I don't know how much of the IP is yours legally, but you can try to find a new partner or work on your own if you strongly believe in the product.
If you want to quit and don't want a "normal" job, consider going back to school. You might be able to quickly patch some holes in your education and meet potential cofounders for new projects.
One quote I like: "when all else is lost, the future remains." Good luck!
You need to determine if the product/idea is actually viable and the problem is in fact that the other founders are failing to execute, or the is is something inherently flawed with the business model. Have some entrepreneurs or VCs you trust and respect review the business and give you their opinion.
If the problem is the other founders, you could start talking with them about bringing on someone to turn the company around or about selling the company to someone else.
If the problem is the idea/product/business model, you should move on ASAP.
In either case, if there is some useful technology that can be repurposed for another idea/business, make sure you get a unlimited license or if the company folds, take ownership the IP assets as back unpaid salary.
Make sure you get the transfer of IP in writing, ideally reviewed by a lawyer. If you do build something successful with the IP, you don't want "the idiots" coming around and claiming they own part of it.
Alright homey, been in nearly your exact shoes- echoing the remarks of others here's what you do: OUT OUT OUT OUT OUT
You've been sold a bill of goods and it hasn't delivered, these startup ventures in some ways are "supposed" to hurt a bit but not like this. Get out yesterday and be firm with your decision.
It is soooo much easier said than done (esp on an internet forum) but here's a coping mechanism: 1) remember you absolutely do not need to line up another gig in order to leave this one- this sounds like a loser/sucker bet and you can fall back on side gigs; 2)The "family" aspect makes things tricky but luckily you can work or not work wherever you damn please.
The crucial thing is to stop the hemorrhaging ASAP, get the hell out pronto.
Caveat: Even if they come up with a way to pay you a BS-y salary, without knowing the specifics of this situation, from what you describe I still say it's time to hit the road and get on with your life and other ventures.
Well, obviously they aren't, otherwise you wouldn't have founded the company with them right?
You can't call someone an idiot just because he's failing, or you'll be called an idiot yourself when you fail, too. Get rid of that notion.