Zirtual: What Happened and What’s Next

Huh?

http://www.wsj.com/articles/venture-capitalist-sounds-alarm-...

http://www.bothsidesofthetable.com/2014/09/28/what-is-the-ri...

http://avc.com/2014/09/burn-baby-burn/

http://www.businessinsider.com/sam-altman-email-startup-burn...

> And at the end of the day… “burn” is what happened to Zirtual.

This is, for lack of a better word, lame. Burn didn't happen to Zirtual, like it's some sort of disease that lurks in the exposed brick walls of overpriced SoMa startup offices, secretly coming out to infect innocent startups when employees leave for happy hour.

Burn is something people manage and are responsible for. Clearly, Zirtual was run by people who couldn't competently manage the company's burn. To put it another way, incompetent management happened to Zirtual.

> The reason we couldn’t give more notice was that up until the 11th hour, I did everything I could to raise more money and right the ship.

Based on the description of Zirtual's finances (more money going out than coming in) raising more money would not have righted the ship. Unless Zirtual found a way to operate profitably, an infusion of cash would have only delayed the inevitable.

I think a good number of early-stage startups in Silicon Valley are operating with less runway than many of their employees would believe, but waiting until the 11th hour to do right by your employees in the hopes that investors will essentially bail you out to make payroll is in my opinion inexcusable.

It was near death yet Musk is now a SV hero?

There's a reason so many investors and employees try to promote a culture of transparency at a company... Because to do anything less is a sign of (a) gross incompetence, and (b) greed.

It is often extremely uncomfortable to stand in front of your employees and say "Hey, we've got 3 months left unless we hit this milestone. Let's work together on this and if you can't commit, we'll help you deal with it." It sucks to say and feels terrible, but better than an overnight blow-up.

In my opinion you should talk to your employees around 6 months left. Just an open and honest talk about 6 months left of runway, here's what I'm doing about it, etc. Then after that, until you gain more than 6 months of runway, you keep employees constantly updated. Yes you risk people jumping ship but many appreciate the honesty and it will help them face the worst case scenario versus not being prepared at all.