
We're Shutting Down and I'm Scared - danaseverson
http://startupsanonymous.com/story/were-shutting-down-and-im-scared/
======
tptacek
Been there.

* If your payables and debts are all in the company's name, nobody is coming for your house. The likelihood that your business was going to die before you could pay all your debts was priced into your contracts. If you have employees, pay them and get them off your books first; employee wages are, depending on the state you're in, the one likely exception to that rule.

* If they were in your name, well, that sucks, but still nobody is coming for your house. Your credit rating will probably absorb all the damage. I've had shitty credit all my life, so much so that it used to make it hard to get checking accounts (I'm not a deadbeat, I just don't have revolving credit, and do have billing disputes that I don't have time to resolve). Shitty credit is not that big of a deal. Just don't use credit.

* It sounds like your wife is right. The existence of startups isn't a guarantee that you'll never need to work for someone else again. The normal life cycle of a startup founder is, (1) work for someone else, (2) start company, (3) run company into ground, (4) goto 1. Think of it this way: had your company been successful, it almost certainly would have left you in a state where you'd be working for someone else for a couple years during your earnout. "Not working for someone else" was never really on the table.

* Getting a company funded and then running it is a resume plus. You won't have more trouble getting another job than you did getting the one you left to start this company.

* Your investors expected you to fail. The odds were always overwhelmingly that you would. The whole startup investment model is, put money into 10 companies, hope 1 succeeds. Your investors are professionals. Let their problems remain their problems.

* Are you going to get ridiculed for failing? Obviously, you're not an HN reader. You'd have gotten ridiculed for succeeding. Ridicule is the air we breathe. Why do you care?

* Most small companies start from nothing. That's good news, because "nothing" is an easy state to achieve. Give yourself a couple years, and then try again.

~~~
patio11
In addition to Thomas being right about employee wages being able to "pierce
the veil" in many states, they're the people most at risk in this situation,
so you owe it to them to make sure they're taken care of. It's the one
circumstance where I would backstop a company problem with personal funds. (If
your company was also behind on e.g. rent or hosting, on the other hand, that
risk was priced into contractual terms, like Thomas said. I'd generally prefer
to make vendors whole where possible but I wouldn't lose sleep over it.)

With regards to your own situation: you're in the best hiring market in the
history of ever. Reach out to your incubator's network and you'll have
attractive job offers starting as early as you can accept them. That isn't the
whole of the solution set: Big Daddy G and the rest of the tech industry are
hiring like mad, too, and they are also throwing around signing bonuses large
enough to cover your last few months of salary nonpayment.

P.S. to other HNers: "And then we didn't pay ourselves salary" strikes me as
something I hear from a lot of failed funded startups which magnifies the
personal financial risk of doing them significantly without meaningfully
increasing the chance you'll pull things through. I'd strongly consider not
doing that, again, unless the alternative is missing payroll for your other
employees.

~~~
tptacek
The dumbest thing I've ever done in my career was to start a "founders don't
take salary" company after earning a windfall from the sale of the last
company I'd been at. Most companies fail. That company was no exception. The
personal cost was spectacular.

Most HN'ers seem to be in their mid-20s. Something you'll learn when you cross
30 is that time is more valuable than money. You'll never get the years you
spend chasing a doomed idea back. If forgoing a salary seems to be a make-
break issue for your idea, pick a better idea.

~~~
nostrademons
I'm trying to understand the context and limits of your advice, in light of
the chicken-and-egg problem of getting people to invest in or buy your product
before proving it out, which usually requires building something to show it's
possible, which usually requires quitting your previous employer so they don't
own it. Are you suggesting that forgoing salary shouldn't be a substitute for
thinking about your revenue model, which I'd probably agree with? That
thinking "I have money in the bank, I'm fine for now" makes you less hungry
and less likely to take the actions you need to succeed? That one should know
when to quit and should never let dreams get in the way of facts?

Or are you saying that forgoing salary is always a bad idea? If you are, how
else are we supposed to start a product company? It seems like it's a worse
idea to take investment without having done some minimal homework and
prototyping to prove out the market, which usually requires at least building
something you can show to customers. It's a very bad idea from a legal
standpoint to do that work while you're still employed by somebody else.
Consulting -> product conversions can work, but it's often really hard to make
time for product development while consulting.

From my own perspective - I started a "founders don't take salary" company
when I was 2 years out of college. It failed miserably, predictably - it was a
terrible idea to begin with, and I folded it up once I realized I was in over
my head. But I think starting it was one of the best decisions I made in my
lifetime, because the skills and perspective I gained from it got me a job
that paid enough that I made back that year after about a year of employment.
I'm now in a position where I have a bunch saved up, and I'm trying to weigh
my options rationally. I'd like to avoid making stupid mistakes, but I'm also
mindful of how the #1 regret of most elderly people, on their deathbeds, is
that they wish they'd taken more risks.

~~~
001sky
The idea that you should preserve investor's cash is a good notion, but not at
the cost of forgoing _fair_ compensation to yourself and the early founding
team. In the long run, everyone is better off from this approach.

(1) Good investors run (on average) profitable portfolios, and they are not
going to be made or broken by pennies on the dollar from the disposition of
the firm's assets in a bakruptcy.

(2) Good founders should have enough 'skin in the game' that the signalling
behaviour forgone by avoiding this strategy should not be the make-or-break
between succusseful outside investment (or not).

(3) Following up, if (1) and (2) are in place, everyone is best served by
having the founding team fully solvent. Preferably before and after the
company succeeds or fails. All of the principal founders, investors, and
employees want each other to be thinking clearly, rationally, and open-
mindedly...with well-understood motives.

~~~
nostrademons
I can easily see paying yourself living expenses, once you've taken investment
(or have paying customers), as a good thing. That's basically "ramen
profitability", and getting to there as fast as possible is important.

I'm wondering about the part before taking investment - when you don't have
any money coming in, are still building out a product (or even a prototype),
and have cash in your personal bank but none in the corporate bank. Is it
appropriate to pay yourself nothing then? Should you make this phase as short
as possible? (Well, obviously yes, but in practice this means a lot of
different trade-offs, like picking a less ambitious project that you can
complete more quickly, or doing consulting to bootstrap the business, or
pivoting to a business that focuses on profit more than userbase, or not doing
a startup at all. At what point should you be willing to sacrifice future
possible gains to ensure that you have money coming in to cover your living
expenses?)

~~~
NhanH
I'm sorry I might have misunderstood you. But if you have money in your
personal bank and none in the corporate bank, why would you pay yourself (and
be taxed on it) rather than just use the money (your money) to cover the
living expenses?

~~~
nostrademons
That's what I'm trying to understand from tptacek's post. Some hypotheses that
come to mind:

1.) Putting money into the corporate bank and then taking it out as a nominal
salary keeps you really honest with yourself. You can't say "There's money in
my bank account, there's not much need for urgency", instead you see the
corporate bank account dribbling dry just as if it were someone else you were
paying.

2.) It reduces personal risk in case the startup goes bankrupt.

3.) It makes accounting & record-keeping easier for when the startup actually
does start making money, since you already have systems setup.

4.) Minimum wage laws require it. I talked to a (Massachusetts-based) lawyer
once that suggested this may be an issue. But then, if it is, how does that
square with all the tech company CEOs that take $1 salaries?

5.) It lets you take advantage of certain personal financial products that are
only available if you have earned income in a year, eg. Roth IRAs.

~~~
tptacek
It's (1). It does more than keep you honest with yourself; it also protects
the value of your time.

------
laureny
> But, I can’t imagine working for somebody else. I wish my wife understood
> that.

She's understood it long enough to let you pursue the dream of your life at
great costs for her, maybe now it's time for you to do some sacrifice for her
and go work for someone?

You're not the first one to have to do that and, you know, survive.

Seriously.

~~~
tod222
I caught this too.

So did one of the commenters: [1]

 _Sorry it didn’t work out._

 _“I can’t go much longer without a paycheck. But, I can’t imagine working for
somebody else. I wish my wife understood that.”_

 _Change your perspective on this._

 _I’m a co-founder of a successful and growing business. I’ve got around $2M
liquid and who knows what on paper. I’m decently rich headed for pretty damn
rich. In the last week, I’ve changed light bulbs, picked up bugs with my hands
(no tissue close, wanted to get it and call the bug guy before people saw it),
swept the floors, took box trash out to the dumpster, cleaned some toilet
stuff (will leave it there) and just generally served people on my team in any
way I could. I find ways to do it because they are talented, could work
anywhere and choose to work here. So I serve them. Also, I have deep
relationships with them and I love them. I want to win with them._

 _From your words, I worry that you don’t understand the point of the game you
are playing. If you want to run any successful team be it a business, a non-
profit, a 5th grade little league ball club – you are servant in chief. Others
exist in the world. You aren’t really ever by yourself or for yourself. Work
on being and building a team. Make meaning and tie it to production. Start by
being the best teammate you can be. Being an employee in an intense and well
managed company is a good place to learn this skill._

To me the key point was this:

 _If you want to run any successful team…you are servant in chief._

Most managers completely miss the "servant in chief" bit.

[1] [http://startupsanonymous.com/story/were-shutting-down-and-
im...](http://startupsanonymous.com/story/were-shutting-down-and-im-
scared/#comment-147)

------
GuiA
Hi!

As your post seems to indicate, you're scared shitless right now and it seems
like the entire world is coming to an end. Trust me, even if it really seems
that way, it's not.

For now, grit your teeth and go through the bad stuff. Tell your wife. Be
honest with her. No matter what, she's your wife for a reason- she'll support
you through all of this. If you neglected your relationship with her a bit
because of the startup thing, then she comes first now. Then tell your
investors. Tell your employees. Tell whoever else you need to tell. Be honest,
genuine and straightforward. The next few weeks are going to suck big time,
but you'll get through them.

Once the big stuff is behind you, take a few weeks to breathe, if possible
financially. You're coming to the end of a long, arduous journey, and that's
always something hard to process. Try to find joy in the little things that
you didn't have the time for during your founder mode. Have brunch with your
wife. Go take a walk alone in the forest. Read a book. Take time to recover.

You will find another job. You don't realize this right now, but having run a
startup for 2 years gives you more skills and experience than others have
developed in a lifetime. If you have to take a job right away because of
financial hardships, take something low stress (consulting/freelance could be
a good choice, for the flexibility, although it can be hard to get started
with no leads). Now is probably a bad time to do another startup. Also, you
probably want to use this as a lesson to remember that you should always have
~6 months of expenditures in the bank that you NEVER touch precisely for
situations like this one.

Don't worry about the investors. It's part of their job - you're not the first
startup that they funded that failed, and you're not the last either. Be
professional with them- if you want to do a startup again in the future they
will remember your honesty and ethics more than the fact that your startup
failed.

You ran a startup for 2 years. Solely by doing that, you've gone further on
the path of entrepreneurship than 99.999% of people who call themselves
"entrepreneurs" have. Take time to grieve, but also take time to see all that
you have accomplished.

If you still feel depressed after a month or two, go talk to a professional
therapist/psychiatrist. Sometimes we need a little external help.

It's going to be OK. :)

~~~
jlebron2
I haven't started a company (yet!) and can't imagine what the OP is going
through but reading this made me feel better :). I will definitely save this
for future reference for when I do start (and more than likely fail) my first
company. Thanks and cheers!

~~~
keithpeter
The bit about 6 months money in the bank sounds good to me (never ran a
startup but been made redundant &c)

------
dsr_
Reminder for people who are running startups and are in serious relationships:
nothing should be a secret from your spouse/partner. Especially money.

Maybe they're supporting you so you can recycle every dollar of revenue back
into the business. Maybe you're gambling your shared savings on the success of
your venture. Maybe you've got a good financial position and your family will
be safe no matter what.

It doesn't matter. Tell your spouse. Get their advice. You don't have to take
it, but they are a valuable resource to you, someone you can trust to listen
to you, keep your secrets and have a different perspective.

It should not come as a surprise to him/her that the shutdown is likely; the
shock of "no, it's definitely over" should only be a small bump.

Then you can both live through it, and go on to the next thing you have to do.

~~~
bksenior
THIS! I can't get behind oscarthegrouch who thought it was important to
articulate the worst case scenarios in a case like this, because regardless
the next steps are the same, but this advice is gold.

Dont get to this point and surprise your partner. She is as much your partner
financially as your co-founder, treat her like that from day one.

------
pbiggar
I've been there. I shut down my YC startup about 3 1/2 years ago. It was
covered in the press more than my launch was! Shutting down was a huge weight
off my mind - we weren't successful and nothing was going to make it so.

You raised money and have employees. Worry about the employees. Get them new
jobs in great startups by actively going through your network and making sure
they get new jobs that they'll love with teams they'll enjoy.

Dont' worry about the investors. They've lost money before. If you raised from
non-professionals, then you may have to apologize. Mean it.

Tell your wife, obviously. You probably don't need to worry about money too
much - now you can take a low-stress job at high pay and get back what you
lost doing the startup.

Also, please feel free to reach out: paul@circleci.com

------
dchuk
If you can run a startup, you're employable as a consultant to at least enough
people to make ends meet. Reach out to your personal networks and try and stem
the tide a bit.

We've all been there at some point in our life, there's nothing shameful about
working for others to make ends meet. And even though most of us hate the idea
of working for other people, at some points in life you have to put your ego
and pride aside and just bite the bullet and do some damn work to pay the
bills.

Life is long, failure is temporary. You didn't crash an airplane with 300
people in it, you just didn't succeed at business, an extremely common
occurrence. Just keep truckin'.

(I realize OP is not the anonymous poster in question)

~~~
walden42
> Reach out to your personal networks and try and stem the tide a bit.

I'm not in OP's position at all, but I'm wondering what you mean by this.
Would you just call/email people you know and ask if they need help with their
business?

~~~
dchuk
Generally, you'll end up connected to similar guys in your field after you've
been running a startup for a while. You can reach out to them and say that
you're offering XYZ consulting services in an effort to pseudo-bootstrap your
company while still working on improving traction for your company. Most
business people will actually really respect that, in fact.

It really depends on how well you've networked though. At the very least, you
can start picking up random gigs on Craigslist or even contract work if you
have any technical skills to at least keep money coming in in the short term
so you can afford some breathing room.

------
smtddr
There are all kinds of failed start-ups. As long as you know you didn't scam
anyone and you can explain to your investors what happened and show
accounting-books detailing how it all unfolded, and you learned something
during this whole experience, you'll be alright in the long term. You can
always try again. Maybe YCombinator(or GoogleVentures or whoever) should have
a support-group for failed start-ups so people can share their experiences and
know that they're not alone. Assuming you're in tech, investors know the
gamble. I'm sure they know at least half the start-ups they invest in
ultimately fail.

That said, one slightly harsh bit of advice:

 _> >But, I can’t imagine working for somebody else. I wish my wife understood
that._

You need to get over that. Working for someone else(after a short break
perhaps) is basically recharging your funds and your mind while you think
about your next company. For all you know, you might run into your next co-
founder in your new job. It's hard to think about the distant future when
you're not even sure how to put food on the table tomorrow.

------
eoghan
If you're in SF, LMK if you want a sounding board and someone to talk to in
confidence. I'll buy you a beer. Help you get your head straight.
eoghan@intercom.io

~~~
mbesto
And if you or anyone else wants another sound board, I'm here as well (SF or
Palo Alto) - mbesto@gmail (I can relate 100% to the OP's struggles)

------
paultannenbaum
I sympathize with most of this post, but the one thing that I don't get is
this line:

"I can’t go much longer without a paycheck. But, I can’t imagine working for
somebody else. I wish my wife understood that."

If the author really is as down and out as he claims to be, I think somebody
offering him good money to get his life back on track might be something that
is welcome. He can always work for himself once things straighten out.

------
piratebroadcast
Get over it and work for someone else, run a few side projects/experiments on
the weekend and after hours. Your wife is counting on you.

~~~
alxjrvs
I came here to make this comment. I completely sympathized (and still do) for
his position - but the luxury of something like "Not working for someone else"
is the first to go when you are in dire straits. If you have debt, a home, and
people who count on you, you take whatever work you can find. I'd call up
Chuck E. Cheese and see if I could get my first job back before I would decide
to just fail on my responsibilities.

When your luck is down, the room for luxury is low. "Not working for someone
else" is a ridiculously large one, and your wife is not in the wrong for
thinking similarly.

Still, to be constructive: Consider work that can sustain your
responsibilities, albeit at a non-optimal rate. You founded a startup, a task
that requires endlessly marketable skills in a growing field. It ended, and
perhaps it ended poorly - but you can, and will, endure.

------
panther2k
I'm there right now (minus the high-profile accelerator and funded part so I
had even less success). It sucks. I'm exhausted. But I'm broke so I need a
job. I can hack stuff together but I'm more of a junior level dev so not sure
how attractive I am to a Silicon Valley startup.

I thought I knew what it took to be successful, so I quit my wall street job
and drove out to San Francisco to JFDI. I even lived in my car for nine months
to save money. It would be worth it once the business took off. It never did.
So I started another one, which failed too. When you work non-stop, every
waking hour for almost two years and fail at everything, you realize you don't
have it all figured out. At all.

The scary part of failing is asking yourself, what the heck do I do now? And
you don't know the answer.

Probably should have made this a throwaway. Oh well.

~~~
yuhong
_Probably should have made this a throwaway. Oh well._

I prefer that the problems be fixed properly if possible.

------
DanielBMarkham
It's not as bad as you think. You're alive. You have your health (hopefully).
Tomorrow you'll most likely be alive and still have your health. This is the
starting point.

Those that love you came along for the ride. If you tried as hard as you
could, and you took this gamble with their blessing, you do not owe them an
apology -- although it wouldn't hurt to give one. They'll still love you and
you'll still be making decisions together.

Debt is bad, but they don't throw you in jail for being in debt, at least in
the states. Do some studying on dealing with creditors. It's a game like any
other game, and it helps if you know the rules. Plenty of folks in debt who
are living happy and fulfilled lives. It's not the end of the world.

As to whether you'll be viewed as a failure or not, this depends on your peers
and your culture. I suggest you hang out with people who view this as a badge
of honor. Life sucks enough without having friends who stomp on you while
you're down.

Family is another matter. Can't pick your family. But you can set some ground
rules for interacting with them. If you need money from them, be prepared to
do things you wouldn't normally do. After all, it's only fair to let them
drive a bit if you're needing their help.

It's nothing but a thing. It can be hugely disasterous, or it can be a slight
bump in the road. The difference is all between your ears, inside your head.
You get to decide how to view this part of your life -- great adventure
continues or yet another failure. I suggest you choose wisely.

------
kordless
Speaking from experience, failure is essential to becoming a good
entrepreneur. I've heard we learn more from failure than any other learning
technique. At no time are you more present in this life when you are failing,
of that I can personally assure you.

I applaud your ability to share your failure with others, even in an anonymous
way. Wherever you go and whatever positive choices you make next will guide
you to the thing you were meant to do.

------
shmerl
_> I’m broke and it’s not fair to my wife to go any longer without pay... I
can’t imagine working for somebody else._

In such circumstances one might need to do what's required, and not what one
would like to. I hope his wife will explain that to him.

------
poulsbohemian
About 18 months ago I was laid off from an executive position at a company I'd
been with about 5 years. At the same time, I was trying to bootstrap a
business on the side, I'm the sole breadwinner in our household, three little
kids, and I had a house that was underwater that we couldn't sell due in large
part to all the foreclosures in the area that were the competition. To make it
worse, we had moved to a very remote, rural area for family reasons, so had
two houses to cover, and _zero_ job possibilities anywhere in the area.
Eighteen months later, that side project has folded (which I'm ok with), the
other house is sold, and I'm doing well consulting (and with minimal travel).
Will your story 18 months from now be rosy and happy? I don't know, but I
suspect if you are the kind that would take the risk to start up a business,
you are the kind that will hustle to do whatever it takes to first reach a
point of survival and then the road back to thriving.

------
flyinglizard
How you deal with the process and its fallout will be a defining moment for
you as a person. Be upfront, be honest, and don't worry to much. Life goes on.
You're in the best place and time there ever existed to fail and move on.

The best advice I can give you is that the sky will clear the moment you
absolve yourself of the responsibilities. You'll be a free, earning man again.
Things will only look up, and very quickly the ideas will start flowing again.

Take your wife for a talk. Explain to her how it's going to be, and that
you'll be looking for a job the moment you've turned off the lights. You will
have some peace, comfort and certainty soon that will allow you to think
clearly, and later on, establish a learning process of everything you've gone
through.

Someone around these parts said that the most difficult part of being an
entrepreneur is managing your own psychology. It's time you get a hold on
yours and own the situation.

Good luck!

------
mbesto
Here's one of the most important lessons I've learned about startup life:

 _There is a fundamental difference between being poor and being broke._

Being broke implies you don't have enough cash or expected cash flow to cover
your debt - but it doesn't mean you haven't accumulated wealth. Being poor
means you neither have cash nor wealth. The OP is simply broke, but not poor.

Knowledge from failing a business is (IMHO) one of the greatest, if not _the_
greatest, ways to accumulate intelligence in business. That is extremely
valuable.

~~~
sayemm
"Knowledge from failing a business is (IMHO) one of the greatest, if not the
greatest, ways to accumulate intelligence in business. That is extremely
valuable."

Amen.

------
aaronpeck
I think what you're going to find out is letting go will actually be a huge
relief. You're going to bumble around feeling like a worthless piece of shit
for a few weeks and then ideas will start boiling over in your mind. Before
you know it you'll be writing a business plan or prototyping something new and
you'll be armed with this failure as a roadmap of what not to do. You sir will
be a-ok.

PS. Not having any money at least once in your life is something everyone
should go through. You'll be surprised at how well you eat and live when you
thought you'd be homeless. You'll also realize how much bullshit you have in
your house or services you pay for that you really don't need. Good luck - you
won't need it.

~~~
apapli
Completely agree. It's amazing what we don't need and I'll expect you find
your confidence in 12 months is through the roof. The shackles you thought
were binding you are were actually made of sand.

So all the very best, and remember this will be an awesome war story for you
to tell in the future.

------
hidingmyname
I wrote
[http://mystartuphas30daystolive.tumblr.com](http://mystartuphas30daystolive.tumblr.com)

Like you, I raised money, went through a top accelerator and had a wild ride
that doomed in failure.

It's ok to be terrified. It's ok to hurt. Fear paralyzes. You will pull your
socks up and do what you need to do. It'll hurt more than you know. You'll
quickly separate your real friends from the rest. And then something amazing
will happen, your life will go on.

The first thing you'll notice is how much of life you've missed while riding
the startup "high life". Big things like love, family, reality will suddenly
become clearer and no longer dimmed by the tinnitus of whatever TechStars
derivative you've been through.

The next is that you're a hell of a lot wiser. You'll find a job and you'll
start performing. You'll look like a legend because the pace and agility you
learned to work at during your startup days will make you a rockstar anywhere
you decide to put your talents to use.

Your performance will bring more money, and power (to a degree) than you've
ever made before. You'll make up for lost time.

And then, like all of us, you'll hear the siren song of entrepreneurship
beckon you out into the world again. You'll pick up the pieces and start anew.

Ride the wave, brother/sister. Godspeed.

------
gavinbaker
It is hard to be where you are. Thankfully life does move forward.

In my case we had a couple million invested in the world changing idea. Saying
we failed was very very hard. Hard to tell my friends, our industry partners
and my parents.

What I did - was take a long walk to my favorite rock on the lake. And I sat
there in the cold and watched birds fly and fish eat and the sky change. I
cried tears of frustration and of grief, for the possibilities that wouldn't
be.

I then went back the office and made a list of things we needed to do. In my
case our investors saw it coming because we'd missed key milestones for
additional funding. Our team was small and I'd been open with them about
missing the milestones.

We negotiated out of our contracts and made our final payments. In our case
our board had made it clear we needed "wind down money" in the bank and we had
it.

It wasn't easy, not by a long shot. At the end I was drained. I took two
months off. I slept, I prayed, I read and I journaled. You may not be able to
do all of that, but give yourself a break.

What I wished I had was someone to talk to who understood what I was going
through. Plenty of people fail in business, but not many have a lot of money
backing it, a lot of people believing in it and you feel like you let them
down. Take up the offers of help to talk in person. I'd be glad to sit and
listen if you want. The good news is that the sun will rise tomorrow and it
will be a new day. And while it won't feel great, you will get through all of
this.

------
clarky07
It's interesting, currently my business (bootstrapped and small) is doing just
fine. Profitable, making more than I used to working for someone else, and I'm
STILL scared shitless most of the time. The wife and I want to build a house
and have kids and that sort of thing, and it all scares me.

The really interesting thing though is that in general working for yourself is
not much if any more risky than working for someone else. Sure if you are at
Apple or Google it's unlikely they are going out of business, but companies
big and small go bankrupt all the time. Layoffs happen all the time. That's
the way things work. You just have to make yourself valuable and work hard.
Especially in our business, if you are remotely competent it isn't hard to
find work right now.

I really should find a way to feel less stressed. Things are mostly fine, and
I know for a fact that I could get a job tomorrow if I wanted/needed to.
"Failure" for me would likely mean taking a high paying dev job at a great
company that I respect. I should just relax and do good work and hope for the
best. It's hard though, and I see where the OP is coming from.

~~~
72deluxe
No point working all the time to accumulate all you can only to die early from
a heart attack.

Working for someone else means you can go home and not think about work until
tomorrow. And you can read a book and develop hobbies, learn to play an
instrument, tend a garden and look after a pet.

I do not envy you. I have had to work very hard in the evenings to get out of
sticky situations, and despite the romantic view of working for yourself, I
like to go home and forget the day.

Take some time off.

~~~
clarky07
That's the interesting thing. I made more money than I've ever made last year
while working fewer hours than I ever had. Things are going well for all
intents and purposes, but building a house and having a kid or two is scary on
many levels. Being responsible for yourself is pretty easy. Being responsible
for a spouse adds a little bit to it. Being responsible for a kid on top of
that (and having the spouse quit working to take care of it) adds
significantly more.

------
mironathetin
Been there too. Here is the lesson to learn: If you got funded and have to pay
invoices, employees (including yourself), never hope for more investment.
Shrink and - if necessary - finally close your business before (!!!!) you run
out of money. This is true for startups, businesses, household budget, pocket
money, girlfriends (hrmmm), etc.

Startup is a high risk, the statistical odds are against you. Investors know
that. If they see you fail, they will not tell you, they will simply stop to
invest (and may be think, you will go on to save their a...). Hope that you
may find new investment means, you did not start looking early enough to know
the odds.

I (we) were at the same position in 2001 when the internet bubble burst. I am
happy to report, that our business needed heavy investment (like yours did)
and it became clear to us, that there will be no more investment for internet
business in the foreseeable future. So we did shut down with money on the
bank, paid our debts, bought out our gadgets from the company and divided the
money that we paid for the gadgets among the shareholders (us :o). Both of us
founders saw the startup as a business not as our baby. So we were able to
look at it from a kind of outside perspective. This was not the reason why it
failed, though, but it lifted us at eye level with the investors.

The way we handled it allowed us to book it as a very interesting experience.
We were immediately able to look forward.

But, here is the positive side: You got investments (a lot even), you survived
for 2 years, which is great. Now get together with your co-founders in a nice
place, drink a bottle or two of good wine and analyze your mistakes.

Sorry to say this now that it is late for you. But next time ...

~~~
mironathetin
Here is another thread about failure: Post mortem and lessons learned: This is
the right attitude IMHO.

[http://elnorr.com/2014/01/27/post-mortem-thanks-lessons-
lear...](http://elnorr.com/2014/01/27/post-mortem-thanks-lessons-learned/)

------
ninive
I'm a CTO and a serial entrepreneur, and i'm into this business since i was a
kid. 6 years ago after a very intense splash in a huge famous company in US,
I've decided to take a break, and fly to the Caribbean to open a sushi
restaurant. My girlfriend is a successful F&B manager so i took all the
suggestions I can handled from her, and opened it. After 12 months, was a
complete failure. The first of my life. I was really scared to lose everything
but just the time to close and open my eyes, solutions were there. Time and
focus are very helpful. I didn't drop. I've found a re-start partner, took my
girlfriend with me in business to advice and manage, changed style, and
finally sold it to at least break even all the debts and have some vacation,
ready to go back to the Internet. The break lasted 4 years at the end, and was
the most important time of my life, looking at it from here now. The major
growth of your soul. Keep the energy and focus, be sincere, and for sure
something good is going to happen. And your second time is going to be
ridiculous easier, trust me. Good luck.

~~~
72deluxe
Sounds like you went to some exotic places and tried some interesting things
though. Likely a worthwhile experience!

I would like to visit the Caribbean. Even America would be good! Must save
up...

------
jonhmchan
This is a dark time, but you can work for someone else. Most of us do.

~~~
perishabledave
Agreed. It's about priorities, if he values his family more than the
comfort/luxury/whatever-it-may-be of self-employment then you do what you have
to do; not saying it would be easy.

------
ojbyrne
"We didn’t leave enough money in the bank to pay off our debt, so now we need
to tell people we can’t pay. Are they going to come after me, or my house and
my car? I’m broke and I’m scared."

Hoping the "well-known accelerator" knew their stuff and the company was
structured appropriately so that's not an issue.

------
eli
" _Will [out investors] forgive us? Will any investor ever trust us again?_ "

These are professional investors putting money into an early stage startup,
right? I'm certain they were aware going in that they might not get their
money back. (And, in fact, that this was the most likely outcome.)

------
omegote
> I can’t imagine working for somebody else. I wish my wife understood that.

Seriously?

~~~
MichaelGG
Seriously. I'm 32, and never had a "boss" per-se. I've had consulting clients,
and I've been at a company before, but always on my own terms.

I recently started work with a part-time client in a more traditional
arrangement and it's quite...trying. I had thought it'd be the opposite:
someone else is running things, you just show up and get things done. If they
make poor decisions, whatever, it's their money and time. In practise, I'm
finding it extremely difficult to deal with. I'll stick it out because I said
I would but it is not as pleasant as I had thought.

It's not a good thing, and I wish as a teen I had been subjected to higher
work discipline. Yes, I know, I'm whining about first-world problems (while
living in a third-world country).

~~~
72deluxe
I am not yet 32 and I have worked for companies as an employee. Also, when I
was utterly broke I did freelance work on the side and different languages and
skills. It helped me get another job in fact!

I think the important thing for me now is that at the end of the day I can go
home and not really have to worry or think about work until tomorrow. If money
was the most important thing in life (or I was deeply in debt again), I would
be working all evening as well, but money isn't the most important thing. Time
is. Time to read, time to play with my cats, time to reflect.

My know a few who work for themselves and they seem constantly restless and
with worry about how to make ends meet when not enough work is coming in. The
idea of working for yourself seems romantic and "free" but it can be quite
stressful, particularly with a family and children.

~~~
MichaelGG
I was hoping it'd be like that: "Clock out" and then forget about things.
Except it's not, and I have dreams revolving around exactly how to solve a
certain problem. Maybe if I became a lumberjack I could rest at night.

~~~
72deluxe
I find the drive home is the time to unwind for that. It isn't a long drive
but I try and force myself to forget it. Of course, I might end up tinkering
with stuff in the evening but I try and make it my own code, not works, to
keep that separation. But mostly I will attempt to avoid computer "work".

I think if it gets too much I will become a gardener for the council and mow
lawns. All that green is quite therapeutic, and you can see where you've been
and where you've got to go on a lawn, so it is good.

------
patrickod
Take some time to decompress. The winding down period is stressful and it
seems you're already feeling the effects.

As many have mentioned you've only enriched your resume with this experience.
Use it to find yourself work, your incubator network should be full of people
looking to hire.

I've gone through this and it's stressful as all hell but you'll make it
through. With your nose right up against it the problems seem much more
formidable than they are in reality. Employees come first in terms of settling
debts. Deal with vendors after that.

One point I'd really stress is that you should talk to people about it. Feel
free to reach out (p@trickod.com)

------
skwirl
I don't have any particular advice to give, but, assuming nothing improper
happened here, if you gave it your best, there is nothing wrong with failure.
Failure is part of the system. Your investors and employees realize that
startups are a risky venture. There are plenty of jobs out there and your
employees will land on their feet.

I have nothing but respect for startup founders who did their best and came up
short. I hope that the experience you've gained serves you well throughout
your career and one day you can look back and appreciate the experience. Good
luck going forward.

------
pdq
This reminds me of the "My Startup has 30 Days to Live Blog":
[http://mystartuphas30daystolive.tumblr.com/](http://mystartuphas30daystolive.tumblr.com/)

~~~
paulrademacher
I'm pretty sure that was fake.

~~~
hidingmyname
OP here. It wasn't.

------
ig1
Talk to your accelerator and your other investors (assuming they're typical
startup investors), they'll have seen plenty of other startups fail and will
be able to give you advice how to handle the situation.

They'll also know which of their other startups are hiring and should be able
to setup introductions to help you and your employees get accelerated
interviews, etc. to help with the transition.

------
iterable
Stay strong dude. I'm sure you'll make it through and figure it out. Many have
made it back from far worse situations. You can do it.

~~~
danaseverson
It's not me, just sharing. :) Thanks though.

------
danthewireman
A big first professional failure is like breaking up with your first
girl/boyfriend - it feels like the entire world is ending. After you find out
that it didn't, it can be wildly liberating because you won't really be scared
of failure any more. I recommend a few massive fuckups in any career.

------
dodyg
I've been having my business for 10 years - which almost died twice.

The business is not about you. Yes you are the founder but you are just part
of the machination to make it work.

When the business fails, it's not a judgement on your character or your moral.
Failure sucks. Tell the truth your employees ASAP. Deal with the fall out
directly.

If you need to downgrade your lifestyle, do it. It is better than having the
anxiety to put up with un-affordable lifestyle.

More importantly - don't be an ass to your wife. If you need to get a job, get
a job. There's plenty of time to try again in the future.

------
tobinharris
Think of the first time you had to build a solution to a problem you didn't
understand. It's scary with lots of unknowns.

Seeing your company collapsing is scary, and you don't know how to deal with
it. There are lots of unknowns.

In the end, you'll find a way of coping that works for you.

There's good advice here in these comments.

Personally I'd recommend finding someone experience to guide you through the
closure. That's what I did (accidentally).

You'll look back in a year and think "That was scary shit but I learnt a shit
load".

------
fredgrott
What I am interested in is the thought process involved in balancing things
like fund raising, paying one cofounder and not others to stretch it, when to
pull back, etc.

Obviously, investors want the dev cofounder paid to get product out the door..

But I am more interested in the decision process...

Let me clarify.. certain small business industries have these
accounting/financial tools to help determine decision trees such as pay off
debt now or later, etc.

Is there a similar set of financial ratios/trends to assist in the above
decision trees?

~~~
dclara
I don't know about his kind of tools, but I agree with you that doing business
has rules to follow.

Cofounders should be paid if the company has received external investment
already. Employees should be paid even if the company is not making money.

Looks like OP is very young, all he and his cofound concerned is about the
product and market, etc., not including how to run a business. In business,
cash flow is always the no. 1 concern. If there is not enough fund, don't
hire, no lease. Based on my previous job experience, $1M cannot afford a team
in office. $3M can only have 1 years expense. Startup's burn rate is super
high. Founders need to have plan B in place. It is said, "Failed to plan is
plan to fail".

Emotionally, it's hard to accept the pitfall from owing $1m to negative. But
how about if you never had that $1m, was that going to feel better? It's all
about expectation and planning.

So the most important thing is to learn what can be avoided from this lesson.
A lot of people are helping him to get rid of fear on the emotional side. It's
sad that I didn't see much help on the business side to help other failed
companies as well. Emotion is temporarily. Closing out process is a must to
go. But how to prevent the 90% of the failed companies to avoid the pain is
more important.

A lot of people care about it, but I didn't see any experts helping outside
the YC meetings, although here is YC extension forum.

------
timmm
We are smarter than this. Why do we accept this as a normal part of our
industry. There are ways to avoid this, the anxiety, heart ache, and lack of
dent in the universe.

Let's learn from this.

------
rdl
Most debt dies with the company. Tax debt (especially employee payroll
withholdings) is really the only kind of I know which carries on, along with
any personal debts which won't get reimbursed (which I got burned by, on
credit cards, several times).

It's all surprisingly easy to walk away from, at least in the US, and
particularly with normal professional investors.

------
throwaway5752
It happens. Tell your wife. Inform the board. Hire a lawyer to deal with the
debts. Inform the employees, giving them some idea of severance and resources
to transition elsewhere . Figure out how money you have left and do an orderly
wind down. Send out rfps to see if anyone will buy all or part of the company.
Then get a new job.

------
peterjancelis
You really should look for a job. There's nothing wrong with it. Look at it as
starting a consulting business with just 1 client, get to know your 'client'
and start suggesting ways you can make more money together - then charge a cut
to do so.

~~~
72deluxe
Good idea on rationalising it in your mind. Good idea.

------
Grokit
I'd say the best thing you can do is learn the lesson that you should have had
a contingency plan for this situation. Particularly since failure is the most
likely outcome of any startup. I know though, that only happens to the 'other'
guys.

------
atmosx
I don't have any advice to offer, but it's the best story/post that I've read
about startups. I think is exactly what you have to read, before jumping into
the startup wagon. Then, you're ready to go, if your gut can take it

------
datahack
Ha! Not to worry. I got myself 700k in the hole in the 2008 financial crisis
trying to "do the right thing." Spent four years digging out of that mess in a
situation where I had to run a company successfully at millions in revenue
just to stay afloat. That is a hell of a lot worse than folding the company,
and if I knew the hell it would take to dig out, I might have folded! But
we're free and clear and making money now so it was worth it. This would be
the fourth company I started. The previous three I went through the same thing
you're talking about. Got to the point where I started to wonder if there was
something wrong with me, or if I wasn't cut out to be an entrepreneur.

I know that feeling of strain and staring at the ceiling wondering if I'm
going to survive. No way out. It sucks. That's entrepreneurship. That's why
I'll never tell anyone to be in business for themselves. You have to really
want it for the right reasons or you'll never be able to survive this kind of
thing — it will break you. I've actually seen quite a lot of entrepreneurs get
"broken" when things got super, super bad to deal with. It's overwhelming.

But, the way to deal with it is this: what is the TRUTH of the situation. What
are the real FACTS? The truth is, it's not that bad. It's not like you're
being chased by ruthless drug lords down a dark street. You're folding a
business.

Whenever you find yourself afraid, find the fear, then find the truth. Keep
working through those until you feel better. It actually works. If you stick
to the facts, you'll get through it.

Also, dude, you need to keep pushing. Get yourself shut down with class, get
honest with your wife, and you'll come out swinging. It might sound crazy now,
but the average entrepreneur who makes it has a few of these under their belt!

Also, awesome piece of advice here:
[http://leadercast.com/en/](http://leadercast.com/en/) Watch the video from
Rorke Denver. Here's the cliff notes (pdf):
[http://leadercast.com/en/downloads/LN_CalmisContagious.pdf](http://leadercast.com/en/downloads/LN_CalmisContagious.pdf)

Now is the time of your testing. How you behave when the shit hits the fan is
the question of what kind of leader you'll find _yourself_ to be, so don't let
yourself down. Be calm, be brave, face fact, and dive in! It's time to learn
as much as you can about what you did to get here and what you can do next
time to avoid this outcome!

------
mindotus
If you are in the NYC area coffee or drinks on me! Just shoot me an email to
john@minus.com

Just remember it's not the end and there is much more to look forward to
perhaps in a future startup months or years down the road.

------
sytelus
ummm... Didn't we invented a marvelous escape hatch called "aqui-hires"
exactly for this situations? If you have even moderately connected investors,
you should be able to get aqui-hired in a week or two, very likely sipping
pina colada on a Caribbean beach to stretch out before you start the new job
with giant bonus vesting schedule that beats any of your colleges. Plus you
get to update your Linked-In profiles with "CEO & Founder of Fantastic Startup
(Acquired by whatever)". There are no loosers in startup world anymore, AFAIK.

~~~
herdrick
Easier said than done.

------
BeccaCory
The comments below the post are what makes this really worth reading.

------
diydsp
yeah, my thoughts echo what most other people said: just keep your eyes wide
open and observant so you can use this experience for next time! e.g. keep a
journal and write stuff down so you remember...

I was at a code review recently with several people who had clearly never been
through a major failure such as a start up going under (i've been through
several...) and the difference in our viewpoints was apparent to me. This is
valuable experience you're getting.

------
informatimago
Perhaps now would be a good time to read or youtube about The Venus Project,
(and perhaps also about money as debt), to get some perspective.

------
CmonDev
I thought start-ups are about spending someone else's money and never your's.

------
akbar501
1.) I hope you are over playing the despair part, but if you really feel that
every sucks then you should speak a professional to help give you perspective.
Seriously, your mental health matters.

2.) Create a list of everything you need to do, then start to work through it.

a.) Have a __conversation __with your wife. Inform her about what 's
happening, what issues you're facing, and ask her about her thoughts. Get on
the same page, that way there are two of you working through this. What's her
game plan? She'll likely have some action items that should go onto your list.

Get your emotions out, but then move on. I've been doing the startup thing for
14+ years and married for 8+. I cannot emphasize enough that you should not
overburden your spouse. She's got a lot on her plate now, so get your emotions
out once (if you're into that), then stay upbeat.

b.) Schedule a meeting with your investors. Have a set agenda, use a
PowerPoint (or other presentation software) that outlines your current status,
etc. Also, show that you are a professional by showing them you have a
plan/budget/timeline to shutdown the business.

Your investors are professionals. They know that a large percent of early
startups fail. What they will want from your is professionalism.

Also, ask for their input. What do they need you to do?

c.) Legal: Speak with your attorney (this can also be before #b). Get their
input on your legal checklist.

You must shutdown the business correctly. Your attorney will be a big asset.
Keep your meeting with them professional and focused. Don't waste time on
emotions in this meeting.

d.) Schedule a team meeting and speak with your employees. Help them
transition if you can. If you're overwhelmed, which it sounds like, then tell
them you'll be happy to give glowing references. This is easy and will require
minimal work on your part while keeping the relationship alive.

As with #a, don't overburden your employees with your emotions. Sorry, but
complaints flow up, not down. They will have their own pressures, and your job
as a manager is to help assuage their fears and help them see that everything
will be ok.

e.) It sounds like you don't have kids. Yah! Seriously, grab a beer. This is
so much easier without kids.

f.) Fill-in this list with input from everyone above plus your co-founders.

g.)It's only Tuesday. Get moving and this done __before __the weekend.

3.) Debt: To any first time founders, please allocate budget to shutting down
a business. Experience matters here, and it's best practice to know your
shutdown costs, to budget for them, and to have the professionalism to shut
the business down when you have just enough money to close up shop. You should
pay debts, invoices that are due, employee salaries, legal fees to shutdown,
etc.

To the OP, create a list of assets/liabilities. If you can sell assets to pay
for liabilities then do it. Be cool about who you owe money to. If these are
other small businesses / startups, then try to make your debt whole.

------
richardlblair
congrats! You failed! I'm serious. I know it's hard to see now, but so often
life's greatest successes are born out of failure.

Hang tight. Things will work out.

------
sjayman
This too shall pass

------
wehadfun
could you sell?

------
asmallfish
Sorry to hear it. I'm sure you can land another job fairly soon if you were
running a startup. Go take a small vacation to clear your mind first.

------
yungether
These posts are like torture porn.

~~~
terra-cheng
I think the story is not real. It's just to sell of the website Startup
Anonymous.

