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On Shutting Down

blog.ycombinator.com

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Re: On Shutting Down

#71

Post by [deleted] »

boznz wrote: post #69
philip1209 wrote: post #8

YC has talked about how startups die of suicide, not homicide. Shutting down is a hard decision, and there always seems to be pressure to do it. Raising money looks like success to others - so it's tough to declare later that you have made nothing of value and will close shop. Here were my shutdown articles after I closed Staffjoy: https://blog.staffjoy.com/staffjoy-is-shutting-down-39f7b5d6... https://blog.staffjoy.…

I guess retirement is a form of suicide. I run a successful one-man programming business but it too will need to shut-down as I would like to retire in 4-5 years. It is especially hard as the company is totally viable, in a great location in the world and has great customers who are really happy to keep giving me work, this means I cannot really shut-down until they are taken care of by either selling off the company…

[deleted]

Re: On Shutting Down

#72

Post by ralphc »

Jach wrote: post #41

There's a kind of shutting down not covered here: getting acquired. Too often a phrase similar to "our incredible journey"[0] appears, in which case as an end-user you know the time for enjoying the service is at an end just as surely as if the startup went bankrupt. [0] https://ourincrediblejourney.tumblr.com/

Is Tumblr's acquisition by Yahoo, then Verizon, on there?

Re: On Shutting Down

#73

Post by itronitron »

philip1209 wrote: post #8

YC has talked about how startups die of suicide, not homicide. Shutting down is a hard decision, and there always seems to be pressure to do it. Raising money looks like success to others - so it's tough to declare later that you have made nothing of value and will close shop. Here were my shutdown articles after I closed Staffjoy: https://blog.staffjoy.com/staffjoy-is-shutting-down-39f7b5d6... https://blog.staffjoy.…

maybe instead of saying that you are 'raising money' say that you have sold part of your company to another company because they expect to get more money from you later

Re: On Shutting Down

#74

Post by pcunite »

hn_throwaway_99 wrote: post #70
claudiulodro wrote: post #36

Earlier quoted context omitted.

If you/investors are not satisfied with the current growth of the company but the company is profitable and not in danger of shutting down, it seems like it would be a wise move to invest the profits towards R&D to create some sort of product that may have better growth. You'd have the benefit of "infinite runway" for your next product and the investors have a chance at getting their money back.

On the other hand, there was recently and article in Forbes about a tech billionaire who saw this pattern (small tech companies with one main successful product that were then pouring money into other speculative as-yet unsuccessful products) and built a fortune doing the exact opposite: he'd buy the companies, basically stop all investment in new products (meaning lay most people off and outsource the maintenance to…

Interesting. I found it discussed here:

https://news.ycombinator.com/item?id=18516584

Re: On Shutting Down

#75

Post by quickthrower2 »

ChrisSD wrote: post #47
hodgesrm wrote: post #43

Earlier quoted context omitted.

It's pretty easy for founders/execs at that point to make regrettable comments along the line of 'this is going to be great for our customers'. Sometimes being honest and taking care of your customer/employees/other stakeholders requires you to say "I don't know" or "this will be a change" instead of what you think they might like to hear.

It's not always possible to make such statements, depending on the terms of the buyout. That goes doubly so if the founders/execs have a continuing relationship with the buyers. Even if it turns out to be a short term relationship.

Maybe you need like a warrant canary. "This service is great for customers" is removed from a url once that is no longer true.

Re: On Shutting Down

#76

Post by Dylan16807 »

ChrisSD wrote: post #47
hodgesrm wrote: post #43

Earlier quoted context omitted.

It's pretty easy for founders/execs at that point to make regrettable comments along the line of 'this is going to be great for our customers'. Sometimes being honest and taking care of your customer/employees/other stakeholders requires you to say "I don't know" or "this will be a change" instead of what you think they might like to hear.

It's not always possible to make such statements, depending on the terms of the buyout. That goes doubly so if the founders/execs have a continuing relationship with the buyers. Even if it turns out to be a short term relationship.

"I don't know" shouldn't be hard to say. If the terms require you to actively lie, well, that's shameful to accept.

Re: On Shutting Down

#77

Post by Zombiethrowaway »

lotsofpulp wrote: post #68
rightbyte wrote: post #44

Earlier quoted context omitted.

... and the people it employs? I see alot of winners in "zombie" startups. I wonder what the ROI of the average business is. Pizza places, AI shops alike.

Problem is when someone bigger comes and puts you out of business. Like a fancy new pizza place with modern decor or a Costco or amazon or Uber. You need the ROI to keep placing other bets to increase your chances of survival.

If you care for your pizza, your customers and employees, you will stay in business for a long time, regardless of who opens a shop next door. Staying power, habits: those are huge positive factors for businesses.

Re: On Shutting Down

#78

Post by Zombiethrowaway »

rightbyte wrote: post #44
TeMPOraL wrote: post #37

Earlier quoted context omitted.

Dreaded by everyone except the users/customers, who come to depend on the service the startup provides.

... and the people it employs? I see alot of winners in "zombie" startups. I wonder what the ROI of the average business is. Pizza places, AI shops alike.

So many people running small businesses make very good money. I hear 20% a lot for normal businesses. Mine is more computer oriented, and old school too, and it is around 45%, several hundred $K a year. Nobody advertises around those because there is no rewards to do so.

If you want to start a business and make money, do not rule out old economy, and bootstrapping. Whatever VCs say.

Re: On Shutting Down

#79

Post by pandapower2 »

boznz wrote: post #69
philip1209 wrote: post #8

YC has talked about how startups die of suicide, not homicide. Shutting down is a hard decision, and there always seems to be pressure to do it. Raising money looks like success to others - so it's tough to declare later that you have made nothing of value and will close shop. Here were my shutdown articles after I closed Staffjoy: https://blog.staffjoy.com/staffjoy-is-shutting-down-39f7b5d6... https://blog.staffjoy.…

I guess retirement is a form of suicide. I run a successful one-man programming business but it too will need to shut-down as I would like to retire in 4-5 years. It is especially hard as the company is totally viable, in a great location in the world and has great customers who are really happy to keep giving me work, this means I cannot really shut-down until they are taken care of by either selling off the company…

Migrating customers away from a one-man band is a pretty thorny issue. Unless you happen to know another one person operation who can take over no other vendor will offer the same level of personalized, hands on service or the same level of trust that comes from always dealing with the same person.

The experience of dealing with "Jane the programmer" Vs dealing with "Outsourced software agency incorporated" is dramatically different.

Re: On Shutting Down

#80

Post by cyborgx7 »

dbcurtis wrote: post #19
clarkevans wrote: post #9

What to do when a company has found a market, reached sustainability with regard to its employees and customers, yet probably will not be providing the anticipated return for its investors? I'd like to hear about ways this has been bridged. Have there been any SV "exits" to a ESOP? Unfortunately, an ESOP requires at a minimum 30+ people to be legitimate exit option and quite a bit of administrative attention and expe…

The dreaded "zombie". Profitable enough that the investors can't pull the plug by force. Not growing enough that anyone will make any money out of it. It is my observation that because of "natural attrition" often both the management and employees tend to get replaced with B-players over time. The investors lose interest, their money is gone, their incentive to care a whit is gone, so they apply their attention where…

Only in the insane world of "startup" culture, a sustainable business that meets enough customer demand to pay their employees and make some profit, is a bad thing.
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