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Ask HN: I want to start a new company, but I'm CEO at a funded startup

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Ask HN: I want to start a new company, but I'm CEO at a funded startup

#1

Post by foundersdilemma »

I'm in a pickle. I have a funded enterprise B2B startup that seems to be going well, but it's clear that the industry is highly competitive, but we are growing quickly. I recently stumbled upon an entirely unrelated business idea, simply because of long conversations with customers in a particular vertical and it's very clear that there's a huge opportunity there (possibly bigger than what we are doing now). How should I handle this? I feel a responsibility to run the current company to the current investors hence I wouldn't want to be distracted, but at the same time, this opportunity is bigger and requires more capital than the current company can finance. I have verbal validation "if you do x, we will partner with you" and I'd like to experiment. There are several concerns: i) How to handle the current team and investors, it can't seem like I've given up on the current business; it still has a lot of potential ii) the reality is that if I run it under the current umbrella we will all be diluted significantly iii) I'm thinking of having a separate c-corp below the current one wholly owned, how do you present this to the board without seeming to be fully distracted?

Any ideas would be very welcome

Re: Ask HN: I want to start a new company, but I'm CEO at a funded startup

#2

Post by jacquesm »

(1) the grass is always greener on the other side

(2) serial entrepreneurs are more common than parallel ones

(3) don't you have a performance requirement with your investors?

(4) does your shareholder agreement allow any of this?

(5) have you talked this over with your investors?

(6) it all depends on the cap table

(7) you could always sell your stake in the current company or engineer an MBO

(8) doing another company underneath the current one will still require buy-in of shareholders

(9) you already seem distracted

(10) a word of advice: finish what you start

Best of luck!

Re: Ask HN: I want to start a new company, but I'm CEO at a funded startup

#3

Post by falcolas »

Seems, to my completely inexperienced point of view, like its time to hire your replacement. Establish a board with yourself on it (probably alongside investors), hire your replacement, and let them run your first company. Use your position on the board to keep in touch with and help direct the running of the company, while freeing up time to work on a second venture.

Re: Ask HN: I want to start a new company, but I'm CEO at a funded startup

#4

Post by alexgvozden »

check your contract and see if there is any legal issues with leaving the company, usually there is and it's significant

after that you will be able to think more rationally but honestly, if you have drive to do something else then leave transition period for leaving the company and in no way tell investors your idea is to start a new company, they will claim this came in the time of working there thus IP for new product should stay in the company

Re: Ask HN: I want to start a new company, but I'm CEO at a funded startup

#5

Post by nosrednAhsoJ »

falcolas wrote: post #3

Seems, to my completely inexperienced point of view, like its time to hire your replacement. Establish a board with yourself on it (probably alongside investors), hire your replacement, and let them run your first company. Use your position on the board to keep in touch with and help direct the running of the company, while freeing up time to work on a second venture.

Agree with this. If you are great at starting things, stick with that. Do what you love. Hire a proven CEO with a track record of taking something from $X million to $XX million. Build a solid transition plan and go be happy.

Re: Ask HN: I want to start a new company, but I'm CEO at a funded startup

#6

Post by screwgauge1 »

If you chase two rabbits at once, both will escape -- ancient chinese proverb

Ask everyone who is fighting every day in the companies they started 3/4/5 years ago - they all wish they were doing deep learning or blockchain!

Some days, it is normal to wake up and think that this other idea you have is far more promising and has far more potential than the one you are working on. Just stay focussed and finish what you embarked on. Startups are about execution. Ideas are only 1%. Soon the novelty of the idea wears off and it is what you do day to day that distinguishes your company from others.

Re: Ask HN: I want to start a new company, but I'm CEO at a funded startup

#8

Post by robfitz »

IMO your only real options are to (a) quit to do the other thing or (b) not quit and forget about the other thing.

If you're funded, you can't do both. But there's some nuance in how one can quit, which depends largely on how far along your current business is.

If you have multiple cofounders and a solid team in place, you can just leave yourself. You talk to the investors first, and give them some sort of perk, such as a right of first refusal, or even spin it out of the current company (which means they get a small equity stake since your current company owns some of the new one). This is all fine, but only works if your current business is strong enough to run completely without you.

If the current business isn't to that point yet, then leaving it will kill it, and dividing your attention is as good as leaving it. Not fair to the investors, not fair to the employees. So you sort of just grin and bear it. That's the hidden cost of taking funding and asking people (both investors and employees) to believe in you. But such is life.

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