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Why I turned down $500K and shut down my startup

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Re: Why I turned down $500K and shut down my startup

#121

Post by JoeAltmaier »

corry wrote: post #119
sparkzilla wrote: post #82

Earlier quoted context omitted.

Here's one Y Combinator founder who spoke out about the continual push to pivot. https://backchannel.com/how-i-f-ed-up-in-ycombinator-35a19e7... >The last few weeks of the program are a bit of a blur. My morale plummeted, and my stress skyrocketed. I dreaded going to the weekly dinners, where I would have to talk to my cohort and confirm that no, we hadn’t found an idea yet and yes, we were still super excited about…

Really hard to read the article and conclude that "YC forced them to pivot". Sounds like things weren't working and YC was honest with them. From the same article: > We went back to PG, and he told us to stop worrying about Demo Day. With the right idea, we’d be working on the company for the next five-plus years. It was foolish to sacrifice the quality of the company to optimize for the next five weeks." Seems like…

...except every 5 weeks is do-or-die with starving startups. Sounds like PG had some inside info on whether they would get funding. Otherwise that would have been the most foolish advice.

Re: Why I turned down $500K and shut down my startup

#122

Post by erikb »

timoth3y wrote: post #49

Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did.…

Loving your article.

1) You can describe the market in a few sentences, even to people without a background.

2) You can track user reaction without the need to ask them.

3) You know that most people don't understand their problem and therefore can't give good feedback via feature requests.

4) You understand human nature. People want to see a payout fast, before investing real energy into something.

5) You can pull the plug when the setup is not right.

Hope to work together with more people like you in the future. Are you currently looking for a CEO position in a start-up btw? ;-)

Re: Why I turned down $500K and shut down my startup

#123

Post by erikb »

ChicagoDave wrote: post #12

After this, I'd never give this guy time or money and I doubt anyone else will either. No matter how shitty you feel about your start-up, if you have a willing team and cash, you should see it through. Being an entrepreneur isn't always about having all of the answers. It's very often about not knowing the answers and figuring things out. Especially if you have a team and cash flow and investors. I think this guy nee…

To me it looks like you haven't seen that he understands all that what you say but figured despite all that there was an exceptional situation that required him to do something unorthodox. And that's also a good thing for an entrepreneur, right? Making a decisions others wouldn't have because one believes one has better insight into the situation.

Re: Why I turned down $500K and shut down my startup

#124

Post by erikb »

EGreg wrote: post #29

People live lives. Companies create products. Sometimes what you build becomes bigger than you. If you want to quit, and everyone else wants to keep going why not let someone else run the show? If you started a chess club, or even a chatroom, and had no time (as the guy says, he only has one life) to be an admin, would you just close down the whole thing and kick everyone out? Maybe. If they really were so passionate…

Great question, imho. But indirectly it is also answered. It seemed like he spent the majority of the power into the project and the others would have joined when it was starting. It's like you have the chess club but other people only come if you are there and maybe even only if you have something special to offer.

Re: Why I turned down $500K and shut down my startup

#125

Post by sokoloff »

50CNT wrote: post #105
vertex-four wrote: post #90

Earlier quoted context omitted.

Really, only on HN and other "startup forums". Anywhere else... well, do you think even an ice cream stand is immediately a viable, profitable business? Usually not. The space between "having a registered company" and "actually in the black and stable" is a startup.

What about bootstrapped startups? They have to be in the black very quickly, if not from day 1. Do they count as startups? Really, we've got four different terms we're trying to delineate. "Exponential growth business" vs. "Incremental growth business". and "Unstable business with total expenses exceeding profits" vs. "Stable business with total expenses below profits" All 4 permutations are valid. I personally like…

Small nit: you mean to use "income" or "revenue" where you use "profits" above.

Re: Why I turned down $500K and shut down my startup

#126

Post by rkwz »

> About 35% of our users continued to use the system at least three times per week after completing registration.

OT, but curious, how is it possible to get this kind of engagement data?

Querying DB to get number of logins per week? But that doesn't mean that they're "using" the system.

Google Analytics? I'm not aware of any such GA feature

Third party analytics?

Surveys?

Re: Why I turned down $500K and shut down my startup

#127

Post by JoeAltmaier »

timoth3y wrote: post #49

Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did.…

I made the mistake of going ahead. 5 years later and little to show (but a frustrated sales staff and confused investors) I gave up. Wish I had the balls to give up years earlier. I could have worked on something with a better outlook, which would have benefitted everyone more. Remember, its not "do this or give up"; its "do this or do something else".

Re: Why I turned down $500K and shut down my startup

#128

Post by dimfeld »

rkwz wrote: post #126

> About 35% of our users continued to use the system at least three times per week after completing registration. OT, but curious, how is it possible to get this kind of engagement data? Querying DB to get number of logins per week? But that doesn't mean that they're "using" the system. Google Analytics? I'm not aware of any such GA feature Third party analytics? Surveys?

Heap Analytics and Fullstory are two popular systems (among others) for this sort of thing. They record and instrument your user sessions much more comprehensively than GA does.

Re: Why I turned down $500K and shut down my startup

#129

Post by mindcrime »

quanticle wrote: post #64
onion2k wrote: post #59

Earlier quoted context omitted.

If the situation were really "take the money and do 70+ hours a week for a year" versus "shut down the business" then I'd agree, but that's a false dichotomy. You can run a startup putting in far less time than that; putting in long hours is a choice. You can bring in a team or outsource the parts you don't like. It makes it harder to succee but it's an option. You could (depending on lots of caveats) simply hand the…

but that's a false dichotomy It's a false dichotomy for self-funded/bootstrapped businesses. But if you consider yourself a startup, you have to deliver growth . It's that pressure that leads to the 70+ hour weeks. It's entirely possible to own and run a business while still putting in reasonable hours. But it's unlikely that business is a startup , by Paul Graham's definition of the word. For reference, Paul Graham…

I personally consider that definition to be bollocks. To me, the defining characteristic is the intent of the company, in terms of it's ultimate size / position. IOW, it's "where you're going", not "how fast you're planning to get there".

I know it goes against the currently accepted groupthink, but I don't believe growing fast is the only way to grow a big company. Or rather, it might be better to say that "at any given point in time, it might or might not be important to be growing fast".

Take establishing a dichotomy between "self-funded/bootstrapped" and "vc funded". I would call that a false dichotomy itself, since it's not an immutable characteristic of a company. You can bootstrap for years, then decide to go chase VC money when/if you need it to achieve your goals.

Re: Why I turned down $500K and shut down my startup

#130

Post by softawre »

macca321 wrote: post #109
timoth3y wrote: post #49

Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did.…

I'm very interested in your learnings. I've worked on enterprise collaboration software before, and came to the conclusions that the users will favour using the simplest thing for the task in hand (email or excel) no matter what SAAS products they have. The trick then becomes 1. sell to management and get them to gamble on enforcing it's usage, (maybe by taking away the other tools, extensive training), or 2. have so…

This is a good idea.

As another example, if I had to enter tracking IDs into some app to have a nice view of when my packages were coming I wouldn't do it.

But gmail picks them from my email for free, so I use the app every day.

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