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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

#61

Post by AndrewKemendo »

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.…

Based on what I read, it wasn't that there was no way to make this work - as you state here.

It's that you didn't want to stake your future on an uncertain outcome.

Nobody can argue with you that such a decision was a bad idea. If you, the founder don't want to do it - it will fail. So I think this just wasn't your passion play and you can't go down this road without being passionate and come out the other side in one piece.

That said, if every founder thought this way we wouldn't have most of the companies that we rely on today (not just startups by the way) - maybe that's good maybe that's bad.

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

#62

Post by nostalgiac »

onion2k wrote: post #59
capkutay wrote: post #38

"I was deciding whether this venture was worth committing to another year of 70+ hour weeks. I need a higher level of certainty than investors do because my time is more valuable to me than their money is to them. Investors place bets in a portfolio of companies, but I only have one life." That's the key quote in the article. It's a fair decision from his standpoint but I wonder if saying that will lead investors to…

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…

Although the author phrases it as "70+ hours a week", my assumption is it's not the hours per week that he doesn't want to commit to it, but the total hours involved that it's going to require to solve the situation.

Whether that's 70 per week or 5 hours per month, the total amount of hours needed is going to be x,00 or x,000 - and that's time he simply thinks is not a priority or valuable to him.

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

#63

Post by a-saleh »

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.…

You mention that you might write an article on distinguishing the tangential feature requests from the useful ones. I would really like to read that :) Especially if I could send it to our product managers, because our product has been in a cycle "we need an enterprise sale" > "potential customer mentions a feature they would have liked" > "we scramble for a month to write the feature and close the deal".

To be honest, it is much better now, but as a QE on the project, now I get to deal with so many half-abandonned/half-finished features.

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

#64

Post by quanticle »

onion2k wrote: post #59
capkutay wrote: post #38

"I was deciding whether this venture was worth committing to another year of 70+ hour weeks. I need a higher level of certainty than investors do because my time is more valuable to me than their money is to them. Investors place bets in a portfolio of companies, but I only have one life." That's the key quote in the article. It's a fair decision from his standpoint but I wonder if saying that will lead investors to…

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 defines a startup as:

    A startup is a company designed to grow fast. Being newly founded does not 
    in itself make a company a startup. Nor is it necessary for a startup to 
    work on technology, or take venture funding, or have some sort of "exit." 
    The only essential thing is growth. Everything else we associate with 
    startups follows from growth.

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

#65

Post by amenghra »

Selling products to SMBs is hard. Most small businesses will often take the free trials but won't be willing to pay for a product if it entails a financial commitment.

I have seen a small companies use student licenses instead of paying for the more expensive commercial license in order to save every possible penny.

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

#66

Post by Negitivefrags »

a-saleh wrote: post #63
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.…

You mention that you might write an article on distinguishing the tangential feature requests from the useful ones. I would really like to read that :) Especially if I could send it to our product managers, because our product has been in a cycle "we need an enterprise sale" > "potential customer mentions a feature they would have liked" > "we scramble for a month to write the feature and close the deal". To be hones…

The key is to ignore the feature request, and focus on the problem.

Users don't come to you with problems, they come to you with shitty solutions.

You need to take their solution, reverse engineer their real problem from that, then work out a good solution for that problem that fits well with your product.

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

#68

Post by j45 »

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…

Another dichotomy may also be pursuing the growth at the behest of investor vs doing it on your own. Growth, or adding value too, can have different meanings to the investor vs innovator. Startups that make money become businesses.

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

#69

Post by T2_t2 »

AndrewKemendo wrote: post #61
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.…

Based on what I read, it wasn't that there was no way to make this work - as you state here. It's that you didn't want to stake your future on an uncertain outcome. Nobody can argue with you that such a decision was a bad idea. If you, the founder don't want to do it - it will fail. So I think this just wasn't your passion play and you can't go down this road without being passionate and come out the other side in on…

> Based on what I read, it wasn't that there was no way to make this work - as you state here.

It totally was! He had no way to solve the fundamental problem of the software - making people use it ALL the time, for multiple (paying) users. If the software was doomed to be one licence for an office of 20, where it is used sporadically for one or two infrequent use cases, it was doomed, and the only hope was a pivot. No one should start a business hoping to pivot.

> It's that you didn't want to stake your future on an uncertain outcome.

Again, no it wasn't. It was that he didn't want to chase hoping there might be a solution, because there may not have been a solution at all. If your whole business plan is "raise cash and hope we pivot to a good idea", is that really a solid plan? Why not just pivot before getting the cash? I have never heard of anyone proposing to raise cash based on an as yet undecided pivot.

> That said, if every founder thought this way we wouldn't have most of the companies that we rely on today

Prove it. No company I can think of knew pre-funding of a huge flaw at the core of their product they couldn't solve, and raised cash so they COULD pivot. Most pivots happen because a company finds a small element people love, so they move towards that. Startups don't go in hoping to pivot to an as yet undecided new plan. I mean, that just seems non sensical to me.

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

#70

Post by timoth3y »

a-saleh wrote: post #63
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.…

You mention that you might write an article on distinguishing the tangential feature requests from the useful ones. I would really like to read that :) Especially if I could send it to our product managers, because our product has been in a cycle "we need an enterprise sale" > "potential customer mentions a feature they would have liked" > "we scramble for a month to write the feature and close the deal". To be hones…

That's a bad place to be stuck in. I'll see if I can put something together that makes sense and is fairly comprehensive. At the moment, a lot of it is "I know it when I see it" but that's not exactly helpful.
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