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How startups should die

blog.42floors.com

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Re: How startups should die

#51

Post by refurb »

larrys wrote: post #29
mbesto wrote: post #16

> I remember sitting down with Paul Graham as our startup was failing. I remember how unbelievable difficult it was to get myself to that meeting. The last thing in the world I wanted to do was to tell him my startup was failing. It took him 30 seconds to process the failure and then he moved on. He was so unbelievably supportive and so excited for whatever it was I was going to do next. And this, my friends, is the…

"is the fundamental difference between SV and the rest of the world. From my knowledge and experience, something like this simply does not happen outside of America." To state the obvious first SV != America. And outside of SV there really isn't the sense of "failure is quite ok no biggie". If you are located in a typical place in america and you lose people's money (I'm not talking about startup shot in the dark fun…

I still agree with mbesto's comment. Relative to a lot of places in the world, the US is incredibly tolerant of failure. A French/German friend from school (which was his first time in the US) told me how amazing it was and that you wouldn't see that kind of attitude in Western Europe.

Re: How startups should die

#52

Post by dfrey »

Why is the founder taking on personal credit card debt to pay the bills of the company? Shouldn't the company just go bankrupt and then that's the end of it?

Re: How startups should die

#53

Post by dkersten »

refurb wrote: post #51
larrys wrote: post #29

Earlier quoted context omitted.

"is the fundamental difference between SV and the rest of the world. From my knowledge and experience, something like this simply does not happen outside of America." To state the obvious first SV != America. And outside of SV there really isn't the sense of "failure is quite ok no biggie". If you are located in a typical place in america and you lose people's money (I'm not talking about startup shot in the dark fun…

I still agree with mbesto's comment. Relative to a lot of places in the world, the US is incredibly tolerant of failure. A French/German friend from school (which was his first time in the US) told me how amazing it was and that you wouldn't see that kind of attitude in Western Europe.

As a Western Europe counter-example, I recently lived through a startup failure and and our creditors are also being extremely supportive, both in the liquidation process and in our next ventures.

Re: How startups should die

#54

Post by dkersten »

mattzito wrote: post #42
YokoZar wrote: post #32

Earlier quoted context omitted.

If the business is sure to fail and you have money left but no clear idea what to do with it, wouldn't simply liquidating and giving partial returns on investment be a reasonable option?

It depends (imo), on the amount of money you have left and who its from. If you've raised $1m from well-to-do-but-not-rich family members and with $500k left you're realized you're totally unqualified to be in your business, or the concept was terrible, no valid pivot, etc., then yeah, give the people back your money. But if you've raised $1m from professional investors and you have $100k left, for example, you might…

If you had $100k left and you tried the FedEx gamble, and lost, you could very well get done for reckless trading. I don't think that's worth the risk.

Re: How startups should die

#55

Post by celwell »

smtddr wrote: post #31
connerbryan wrote: post #28

Earlier quoted context omitted.

Eeesh. Nothing is more uncomfortable than a friend who owes you money.

A rule my father taught me when I was young. "Never loan money to a friend with the expectation that you'll get it back, be ready to just let it go."

Jesus also said this: "And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount. But love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High, for he is kind to the ungrateful and the evil."

Re: How startups should die

#56

Post by ballard »

I'm not a fan of nascent bragging about killing your latest startup, leaving customers out in the cold without a good reason or advanced warning. Find a buyer or pivot, otherwise it's just flushing time, money and credibility down the drain.

For a first bootstrapped startup, a FNAC that doesn't require much overhead / support and can be built slowly for awhile is a starting point. It's not a proper startup, but it's something that puts founders and customers in less jeopardy.

(Startups proper are go big & fast or bust.)

Re: How startups should die

#57

Post by ballard »

dkersten wrote: post #53
refurb wrote: post #51

Earlier quoted context omitted.

I still agree with mbesto's comment. Relative to a lot of places in the world, the US is incredibly tolerant of failure. A French/German friend from school (which was his first time in the US) told me how amazing it was and that you wouldn't see that kind of attitude in Western Europe.

As a Western Europe counter-example, I recently lived through a startup failure and and our creditors are also being extremely supportive, both in the liquidation process and in our next ventures.

That's savvy b/c it's likely. The team, idea and execution can all be in tune but there's still that darn uncertainty of popularity.

Hope the team's still motivated to carry on; good teams are hard to come by.

(VC's are almost obsolete, unless they have mucho value-add: http://wefunder.com/)

Re: How startups should die

#58

Post by 001sky »

Our entire team is made up of entrepreneurs that have at some point failed their own startup. There are hundreds of companies like us that are always looking to hire awesome entrepreneurs.

Re: How startups should die

#59

Post by jacques_chester »

fludlight wrote: post #34
pixelmonkey wrote: post #27

I was once on the other end of this -- witnessing a startup that failed "the wrong way". The unethical way. I decided to use a startup to raise some money for a non-profit. Their business model was to help fund events / organizations with their platforms, and take a fixed 2-3% commission on the funds raised. I raised $500 using the platform. But I never received the check for the $500. I knew the founder personally.…

> That is called theft, plain and simple! Not theft, but fraud. Unfortunately, it happens in many startups that don't have a qualified finance/business guy in a senior role.

Off the top of my head there's also breach of trust and possibly trading while insolvent.

If you take money from A in order to give it to B on A's behalf, you are a trustee of the money -- it belongs to you in common law but not in equity and you cannot repurpose it for something else. If the money cannot be conveyed to B, you must return it to A.[1]

Lawyers and accountants typically keep funds held on trust in a completely different bank from their own business accounts, just to avoid even the possibility of error leading to a breach of trust. To avoid even the whiff that funds on trust might be comingled with regular income.

Trusteeship can arise without anyone signing anything and it comes with high legal standards. If you have a business model that involves doing something like this, you need to consult a lawyer in your jurisdiction about the local laws for trusts.

IANAL, TINLA.

[1] As an aside, I suspect this is part of the problem Readability had with their "we have money waiting for you to collect, Mr Webmaster!" growth strategy.

Re: How startups should die

#60

Post by vacri »

3327 wrote: post #4

Basically boils down to an 'honor code'. When you are going down imagine yourself as a great person and that history will remember every action you did. If you keep your respect and dignity people will respect you and you live to fight another day. If not no matter how successful you may or may not be, someone will someday say: "yeah its a great company but he fu*ked so so so over". You don't want to be that person.…

This isn't really true. AirBnB got to greatness by using a lot of shady tactics earlier on, and HN was split half-half on whether this was a good thing or not. History essentially forgot those shady tactics, and AirBnB is a gorilla now.
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