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The last day

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Re: The last day

#41

Post by Udo »

fatbird wrote: post #38
Udo wrote: post #5

This story mirrors my startup experience exactly , including the moment where I had to lay off my friends, took a last long look at "our place" before turning the lights off, remembering that this was what I had sacrificed my relationship for, including the ending where I thought of nothing but the crushing mountain of personal debt. In some ways, this is the archetypical founder's nightmare, and it's happening every…

What it should do is motivate founders to 1) read the 'sunk cost fallacy' article on Wikipedia, and 2) set clear lines well before 'mountain of personal debt' and 'ruined relationships', where you call it over. I walked away from a startup when it ran out of money. The founders were floating a proposal to guarantee a business loan with their houses. That, to me, was a bridge too far, an inability to recognize too muc…

I agree, but I do think there is more to it than a sunk cost fallacy at work, though that part certainly plays a large role. In my case, the first year doing the startup was absolutely miserable, it was indescribably bad from an economical standpoint. Then, things picked up and for the first time we got the feeling that we could actually accomplish our ambitious plans. We identified personally with our "specialness", behind it all was the idea that somehow we had the right stuff. After a period of good profits and rapid expansion, several huge projects suddenly fell through. If we had never been borderline successful (albeit for a short while) I wouldn't have had this manic pipe dream of a possible recovery in the first place. That hubris was fatal.

Of course, there is never just one reason for anything. Of course, there was a lot riding on making the startup work, not only in terms of financial commitments (that death spiral only appeared towards the end times) but also a large part of my personal reputation. Failing with a startup in rural Germany is simply different than, say, falling through an incubator in Silicon Valley. There is a lot of stigma involved and everyone knows your name. It's also a bitter experience when your own family and friends start seeing you personally as a disappointing failure.

The deeper lesson here I think is to watch out for this type of creeping overcommitment as well as keep a watchful eye on what it actually means to fail. The level of personal commitment I mistakenly applied to my startup was simply toxic, to the point where I couldn't do my job anymore. While maybe trivial for some, it's a huge and complex lesson for people like me who are too quick to put too much behind their ideas.

Re: The last day

#42

Post by Pwnguinz »

slaven wrote: post #36
aaronbrethorst wrote: post #23

Earlier quoted context omitted.

You can't pay your employees with page views. Profits (or revenue, to be a bit more precise), on the other hand, are directly exchangeable for rent, food, payroll, keeping the lights on, and other such necessities. The dollars a farmer uses to make payroll are fungible. It doesn't matter if they came from a stupid government subsidy or a sale at a farmer's market.

Unless you're one of the many Instagram-like startups that have higher burn than revenue and still get paid handsomely.

Or no revenue at all, in the case of Instagram.

Re: The last day

#43

Post by luke_s »

Udo wrote: post #5

This story mirrors my startup experience exactly , including the moment where I had to lay off my friends, took a last long look at "our place" before turning the lights off, remembering that this was what I had sacrificed my relationship for, including the ending where I thought of nothing but the crushing mountain of personal debt. In some ways, this is the archetypical founder's nightmare, and it's happening every…

Ouch! Two questions:

1 - Knowing what you know now, is there anything you would have done differently?

2 - After you turn off the lights and walk out, what happens next? Have you managed to bounce back? I would imagine that the skills that enabled you to run a startup (even an unsuccessful one) would be highly in demand.

Re: The last day

#45

Post by fatbird »

Udo wrote: post #41
fatbird wrote: post #38

Earlier quoted context omitted.

What it should do is motivate founders to 1) read the 'sunk cost fallacy' article on Wikipedia, and 2) set clear lines well before 'mountain of personal debt' and 'ruined relationships', where you call it over. I walked away from a startup when it ran out of money. The founders were floating a proposal to guarantee a business loan with their houses. That, to me, was a bridge too far, an inability to recognize too muc…

I agree, but I do think there is more to it than a sunk cost fallacy at work, though that part certainly plays a large role. In my case, the first year doing the startup was absolutely miserable, it was indescribably bad from an economical standpoint. Then, things picked up and for the first time we got the feeling that we could actually accomplish our ambitious plans. We identified personally with our "specialness",…

I absolutely agree that there's a swirling mess of emotions and impulses around giving up and walking away and declaring it over. I was, rationally, absolutely in the clear that it was time to walk away from my own experience. But I still deal with a certain emotional residue around doubts about my decision and worries about how the others think of me.

Re: The last day

#46

Post by OldSchool »

Hopefully this is a fictional account of at least the emotions felt by the subject, Mr. "CEO."

If you're going to be in business, I suggest throw out your hockey sticks, pivots, titles, and other nomenclature associated with any romantic fiction you think you're embarking upon. All business is about profit - the "math." Most often that means selling something that costs you less to acquire/produce. Sometimes for a savvy few, that means the business itself is the product.

If you generate substantial profit, you'll be a hero who can do no wrong, with admirers in proportion. If instead you run out of money, you quietly close up shop and start over or take a real job for a while.

If you're really cut out for business you have to be thick-skinned and rational. Any emotional attachment you have to the business will likely just impair your judgement and cause you to miss opportunity or worse take you down with it someday.

Re: The last day

#47

Post by Udo »

luke_s wrote: post #43
Udo wrote: post #5

This story mirrors my startup experience exactly , including the moment where I had to lay off my friends, took a last long look at "our place" before turning the lights off, remembering that this was what I had sacrificed my relationship for, including the ending where I thought of nothing but the crushing mountain of personal debt. In some ways, this is the archetypical founder's nightmare, and it's happening every…

Ouch! Two questions: 1 - Knowing what you know now, is there anything you would have done differently? 2 - After you turn off the lights and walk out, what happens next? Have you managed to bounce back? I would imagine that the skills that enabled you to run a startup (even an unsuccessful one) would be highly in demand.

1 - Absolutely, there is a huge list of things I would have done differently - and there's a huge list of failure modes I now know how to look for. The most obvious thing: I would never again borrow money personally to invest in a failing business, that was just unspeakably arrogant and stupid. But there are also a lot of operational and technical details that I would never screw up like this again.

2 - I took a job pretty much immediately. I consolidated my debt into a more manageable package, I'm still paying it off though (it's really huge). The alternative would have been declaring personal bankruptcy, which in hindsight might have been a much better move, but at least I am taking responsibility this way.

I did bounce back in a sense that my life is in order and I'm financially sound again. I have a good job (yes, my crisis management experience paid off), I travel a lot on business, I have a nice car. But it's not the same as succeeding with your own company. On the other hand, my job has taught me several key things I should have known when I did the startup, so I'm really thankful for the opportunities I got.

I'm pretty sure I'll try this again, in a safer and saner environment. It will definitely involve less dreams and more math.

Re: The last day

#48

Post by ams6110 »

courtewing wrote: post #16

I find this story extremely tragic -- not because this man's company, his dreams, failed so tremendously, but that he allowed two fundamental aspects of his adult life to fail with it. Is it the prevailing opinion in the startup community these days that building up personal debt and letting your relationships fail are worthwhile parts of starting a company, or is this, as I suspect, just a sad story about misaligned…

personal credit cards

All the business credit card applications I've seen have joint and several liability between the company and the individuals personally. Maybe there's a point at which a company can get credit cards that nobody is individually, personally responsible for, but AFAICT it's not at a startup.

Re: The last day

#49

Post by uahal »

sentiental wrote: post #17

One of the best decisions I ever made was to admit failure early when I saw it coming. It wasn't ambiguous or one of those "if I try hard enough, I can turn this ship around" situations. It was clear that my idea, project, marketing efforts -- all of it -- was essentially going down the tubes. The cash in my savings account burnt off like fog on the Golden Gate. These are standard pressures, but there were some syste…

Had the same experience. Feel the same way.

If it's not working but there's a chance you could make it something valuable, give it another go.

If it's not going to work and you know it's not going to work, it's time to shut it down and move on.

(edited for clarity)

Re: The last day

#50

Post by bencxr »

Great piece. What is important to know is that it is not over. I hope there will be a part 2 somewhere in the future - telling of the comeback!
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