Ask HN: Should I stay at my default dead startup or go and do something else?

[throwstayornot]

Hi everyone,

As you can probably tell from the title, I'm one of the cofounders of a VC backed startup. I've been working on this startup for about three and a half years, but we've pivoted a couple of times and have been working on this particular iteration for about two of those years.

In that time we've raised about $10m, have about $7m left in the bank, and are a team of about 15. We are making basically zero revenue (a rounding error amount), and almost for the whole of the three years that has been the case. I find my cofounder very hard to work with at this point - for a variety of reasons.

I feel very tired, and it has been a huge slog to get this latest version of the product out and I have little confidence it will meaningfully impact the metrics that matter i.e. revenue and retention.

But at the same time, I know that I want to build another startup.

Does anyone have any good mental models for how I should think about whether or not to stay at this startup any longer? I feel a sense of obligation to our team, and obviously we have a reasonable amount of cash in the bank (investors want us to return this), and I feel obviously worried about leaving without a clear plan on what to do next.

Would appreciate any thoughts!

Thanks!

[authorfly]

What stands out to me is the duration of time and the disproportionately low appearing capitalization of the $10m - how did only $3m end up spent? You'll need to analyze this.

But really, if you have no revenue, and no passion - be open with your cofounder. Dwindling along until you use all $10m isn't fair to anybody involved really. You must both know this; who decided, and was it on purpose? And if investors want it back, it might be a good time to decide on this.

At the same time you have space to move. Most startups in the US are default dead for much longer than you have spent in the market now, especially those that raise $10m (you hire bigger teams).

Be very realistic about the end consumer and their problems and think from that angle. Is there an alternative. Do you possess the motivation to focus on it. Are you on the tech side?

One thing that might be tricking you or your cofounder is the $7m - you might see it as a strength. Indeed it is an "asset", but as to mental models, read what Jason Cohen says and consider if it really is a benefit, or only a benefit if it is used wisely. Where does it, your product, your expertise and any industry news fit into this landscape? https://longform.asmartbear.com/swot/

And don't worry too hard. You can try again. You have given employment to a dozen people and probably helped shape them. Contrary to what you will hear, if you were not the face of fundraising, this will likely not prevent future fundraising, but you will need to tell the honest story. Waking up to this not working at this point is not the worst - you are doing well on that. What I will say is that 15 people who know how to work together, combined with good morale and clear leadership, could certainly still pivot to success.

[muzani]

All VC backed startups are default dead. It's terrible phrasing. You're basically asking if you should stay at your default dead startup or be at another default dead startup.

Another irrelevant data point is how long you have failed to make revenue. We see patterns of startups building things for 4 years, then hit product-market fit 2 years after launch. You have the runway for that, and you've already put in the time. However, there are startups that start from scratch, launch a thing in 4 months then get to PMF 2 months later. You rarely see data where someone launches something 4 months and sees PMF 4 years later. Starting from scratch isn't bad.

It sounds like the problem is with your cofounder and the processes that led you to this point. So based on the given data, I'd say do something else.

[andrewmutz → muzani]

> All VC backed startups are default dead.

That's not true. If you have a startup that actually could pay all its bills and turn a profit if it wanted to, it's default alive. Just because you're choosing instead to spend on growth, that doesn't make it default dead.

[hobs → andrewmutz]

That really is the subset of startups we'd call VC backed - interested in hypergrowth and discussions of TAM instead of just making another profitable business.

[thingsilearned]

Perhaps more importantly than a mental model for thinking about this you might need the right mental state. You're tired and not seeing a path forward. That leads to burnout fast and isn't a great space to make big decisions from.

I'd talk to your co-founder and start by taking some time off. I bet for the past 3 years of grinding on the startup you haven't done a good job with vacations. If you went and fully unplugged for a month (or more) you might be in a place for a better perspective.

You might feel like you can't get away - that you're too essential to some work right now - but in my experience a top role of co-founders is to keep the passion and vision strong. Where you sound like you're at mentally you may be doing more team harm than good and your co-founder may be surprisingly supportive of you taking some time to get rest.

[swedonym]

If you don't think your current startup will scale and achieve escape velocity, and you don't see a path to that or have the energy to take it there, it's time to move on.

Thinking about the long game, if you want to raise VC funds again, your reputation might be better served by winding down and returning the funds you haven't used, instead of burning through the remaining 7M.

If your team is still energized and believes, it might be better for the company for you to move on. You could explore an advisory or board only role and help identify a new leader to take the reigns.

[didgetmaster]

This situation is very depressing for every startup founder who is trying to bootstrap their company without any VC capital. We dream about what we could do with $10M to kick development and marketing into high gear.

If you didn't have the money to pay yourselves a liveable wage, would you still have the passion to keep going? If not, it seems like you are headed down a dead end road.

[spencerchubb]

How much work did you do to validate the idea? Don't just ask people "Would you use this?" They will disproportionately say yes, because people like to be polite.

Instead, you could ask "What problems do you face? What solutions have you tried? How effective are those solutions?" If someone has not tried to solve their problem, they're not gonna care about your solution. If someone has tried to solve their problem and failed, then you know you have a killer painpoint.

[rastierastie]

Co-founder here.

Why don’t you pivot with another startup? We launched some months ago, see serious traction, are raising a much lower amount in Europe and are close to turning actual revenue within the coming months.

Happy to get on a thread / call with you to understand what you’re doing and if there is synergy possible. Would be a shame to let all the effort go to waste.

corrals.prim-0c@icloud.com

[mstaoru]

My mental model would be to decompose it into 3 dimensions and try to find some kind of superposition.

Dimension 1 - are you enjoying your work? Is your work meaninful? How does it affect your mental and physical health (either way)?

Dimension 2 - what are potential career opportunities if you continue with this company? Will you have a multi-digit exit? What are the chances? Again, how does it affect your mental and physical health (either way)?

Dimension 3 - can you continue and mend relationship with your cofounder? Is it a personal conflict or different world views? Can you change to accommodate their view? And, again how does it affect your mental and physical health (either way)?

Make an Euclidean sum of these vectors and see where it leaves you. Nothing is more important than health, but startups (and relationships) are often hard and grueling work, perhaps you enjoy it but need to put in the effort? Or you hate it and stay there out of guilt? Quantify and figure it out. Best of luck!

[bombcar]

Sounds like burnout. Take a one-month sabbatical and then revisit.

[space_oddity → bombcar]

Taking a step back to recharge sometimes can be the answer for many things...

[keiferski]

As someone else said, why did you raise $10m but only spend $3m? Presumably at least some of that extra $7m could be used for marketing, sales, partnerships, etc. to get more users and ultimately revenue, even if it requires another round to get to profitability.

[codegeek]

I have not raised VC yet in my life but if I worked on a business for 3.5 years, burnt over $3,000,000 and have almost 0 revenue with multiple pivots, I would fold it, return the remaining cash back to investors, thank them for the support and take a couple of months off to clear my brain.

The problem is you still have no traction or considerable revenue to show after 3.5 years. That right there to me says that it's time to end this misery.

Hope it helps.

[llamaimperative → codegeek]

Plenty of success stories start this way. Unfortunately, since it makes it impossible to really determine what to do in such a situation.

[brudgers]

I'm not suggesting you stay. Rather that you might be experiencing one of the hard times that often comes with running a business.

If you have no clear direction, why do you have 15 people? Cutting staff is one of the hard times of running a business. Cutting staff increases runway. That's just gravity.

Some other remarks:

+ If the investors are asking for their money back, then your investors are a poor fit to your business's needs.

+ The difficulty of working with your cofounder are in part because you are experiencing a hard time in the life-cycle of a business. They are also because your cofounder is experiencing a hard time in the life-cycle of a business. All the petty baggage that's built up over the years is bubbling to the top in both of you.

My best advice is to try to do the right by people. The only way to know what that actually is is to ask. Asking and trying to do right by others is also doing right by yourself.

Maybe it works out. Maybe it doesn't.

This is probably not your only rodeo.

Good luck.

[onemandevteam]

If you don't enjoy what you're working on and have little confidence in it, then move on.

[null_investor]

I hope I don't sound rude, but...

It seems you got lucky! You raised all this money without having the courage to do something simple, like talking with the people who footed the bill and your cofounder. How's that even possible?

You don't have an obligation to your team or anybody. Imagine if, instead, you make them waste a few years with you when you no longer believe in this business. This is much worse.

In my view, you must be transparent with everybody. If you keep running it, you are no different from Adam Neumann. If I had invested in your company, and you'd keep wasting my money as you no longer believe in it, I'd sincerely believe you are a conman.

ps: I'm still curious why VCs haven't kicked you out. 3,5 years and no revenue. This looks like fanfiction to me. Don't give me those Figma examples; you aren't building Figma.

[shrimp_emoji → null_investor]

They're making digital infrastructure that other startups those VCs fund will be able to use, maaan.

[null_investor → shrimp_emoji]

It's hilarious, I can't even... only happens in America. Get $10m and no pressure for revenues

[shrimp_emoji → null_investor]

Username checks out

Consider this: Uber loses `x` per year but somehow synergizes with (i.e., provides services for) another startup that gains `2x` per year. That's a net of `x` per year for the investors!

And your observation that you need money to make money is correct. That's why it's traditionally an American thing -- lots of that around.

[richard___ → null_investor]

Bros jealous

[willsmith72]

i'd get out. if you're fed up with your cofounder at this point and doubting the product, it's over

[space_oddity]

Consider what you're giving up by staying. Could your time and energy be better spent on a new venture?

[hipadev23]

why are you releasing new versions of a product without any customers or revenue.

[moomoo11]

Wtf. How do I learn to raise 10 million? And after 3 years they have no compelling product or revenue? Can you tell me how your co founder did it?

[Lionga → moomoo11]

Write the magic letters A and I on every slide of your pitch deck.

[space_oddity → Lionga]

An interesting perspective

[JasonSage]

I’ve agreed with a lot of comments I’ve read, but something small I’d like to add:

Consider that any change is an opportunity for all parties involved to be better off. This isn’t to say that your cofounder or employees need somebody else, just that it’s better to go into any discussion assuming that there’s a everybody-wins scenario rather just a win-lose scenario. Maybe the everybody-wins scenario is having the conversation with your cofounder and choosing to stay. There’s lots of good things that can happen if folks conduct themselves with the right mindset to capitalize on new opportunities as they come along.

[jimnotgym]

Do you believe in the product? Do you think it can make it? It doesn't sound like you do?

If you don't then wind it up ASAP. If you do, but don't like the organisation you are in, then ask yourself a different question, how do you get rid of the other person.

If you are asking, 'can I just hang around and grift as much of the $7m into my own bank account', then I have nothing to offer you. You can examine your own conscience for that.