

Ask HN: My startup is failing, but my side project might be winning. Do I quit? - fundedthrowaway

This is a throwaway account.<p>About 6 months ago, my startup I co-founded received $1M in seed funding. We raised the money on hype and a smooth talking co-founder. Previous to the funding, we had a bit of traction selling some tech to some large enterprises.<p>Fast forward to today, we&#x27;ve only had 1 more sale over the last 6 months, and the way our pricing is set up, we&#x27;re making pennies per day. We have 2 total clients, and their contracts run out in May. These 2 clients net us about 30 users per week. We&#x27;ve considered pivots, but we can&#x27;t agree on which pivot to go with. We are slated to make about $5,000 this entire year. Our runway gives us until December until the $1M runs out. We&#x27;re not at each other&#x27;s throats, but we know we are failing.<p>Over Christmas, I built a small side project on my own and launched it just to see if it would be a hit. 9 weeks have gone by, and it&#x27;s shown steady growth. It&#x27;s got 1500 active users, people who are logging in every day and spending about 7 minutes on the site per day. It&#x27;s got well over 40k page views per week, growing about 20-40 users per day. Each user performs about 6 events per visit (event = upload a file, make a comment, upvote someone&#x27;s file, make a listing, save for later).  There&#x27;s 1000+ listings with 100,000k+ uploaded files. It doesn&#x27;t make any money, mostly because I have a moral issue with making money on the side while my main startup is doing so poorly. But I could very easily start adding subscriptions or premium features.<p>My dilemma: is this side project good enough to quit my own funded startup? I&#x27;ve already asked my co-founder if he would be interested in this pivot, and he said he wouldn&#x27;t. Do I ride out my main startup while letting the side project grow on its own?<p>Does anyone have any experience or advice on how to quit your own startup?<p>I&#x27;m so damn confused.
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fsk
One concern is that your current investors could sue, claiming ownership of
your side project.

Why not pivot to your side project? If your cofounder doesn't want to do it as
a pivot, pitch it to your investors. If they also aren't interested, then you
can quit in good conscience (and make sure it's legally done right so they
don't come back and sue you later).

~~~
alain94040
Good advice. Be transparent. Email your investors and co-founders, politely,
with your analysis of the current situation and status of the side project.
Ask them if they anyone is interested in the side project's progress.

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anigbrowl
I think you should be having this conversation with the investor whose money
you're burning through at the rate of tens of thousands per month! Now, I
dunno your precise situation so you should probably speak to your personal
attorney first about your contractual obligations to your investor as well to
your co-founder and anyone else in the picture.

But I think the investor is hoping to recoup or better yet to grow the value
of that $1m investment, regardless of how that happens, as opposed to get a
data point on the quality of the original investment decision. I don't know
exactly what your side project is but if it is generating consistent growth
and daily engagement with little or no additional effort on your part that
sounds promising.

If I was your investor Id be far more impressed by your candor about the need
to change direction than I would disappointed about the first idea not panning
out.

~~~
fundedthrowaway
Thanks very much for the feedback.

The investors are fully aware of our struggles. Our board meetings no longer
involve going over new product or marketing points. We simply discuss sales.

However, I haven't spoken to them about quitting. We've spoken at length about
pivots and even about returning what's left of the money.

My opinion is that we should return the money since none of our pivots make
any sense, and frankly, I don't know if I have the gas to pivot, but no one
agrees with me. Everyone has an idea of where we should pivot.

The side project is 95% organic growth. I wrote a bot that sent some automatic
invitations at first, but I've run out of leads. The only work I'm doing here
is answering emails at the end of the day with suggestions/questions from the
growing user base. Plus the occasional bug.

~~~
anigbrowl
You're welcome. I have to say I admire your candor; if you're thinking about
returning the money then I'd say definitely discuss your exit options with an
attorney. Of course everyone wants to pivot, it's human nature to postpone
unpleasant decisions in the hope that something will change tomorrow, and if
someone else is footing the bill then it's doubly tempting. I'm sure you're
familiar with the sunk cost fallacy too. It's no fun feeling like the only
pessimist int he room when everyone is predicting that you're going to have
that Great New Idea any day now.

Now, I don't know if you have a prospect to make money out of the side project
or what your financial situation is, so I wouldn't advise you to do anything
drastic, but I suggest you pick a date in the near future to review, and if
you still feel the same way when it arrives, then announce your decision and
disentangle yourself in an orderly fashion (having first worked out what that
would involve). Lots of luck.

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mattm
I've never been in this position so you can just throwaway my input if you
want.

Some questions:

\- You're burning through $60k/month. What are you spending it on if you're
getting no sales? Can you cut the expenses to just focus on the necessities?

\- Your co-founder is not interested in the pivot. Why not? Does he see
something you don't? Maybe your side project is only getting growth because
it's free. If you could "very easily" add paid models, why not try that first
to see if it actually works. If it does show some promise, then I think at
that time, it would be better to approach your investors as you've at least
validated it a little. I don't know what the side project is but is it legit?
You talk about uploading files so perhaps people are using it in a way that
might be a legal grey area?

> "I have a moral issue with making money on the side while my main startup is
> doing so poorly"

\- I'll challenge you here and say that I don't think you do have a moral
issue with this. After all, you started this side project while having this
startup which took away time from it so you didn't have moral objections with
that. That being said, the fact that you did go out seeking something else
either tells me a) you're not good at focusing on one thing in which case a
startup may not be a good path for you or b) you have an inclination that the
startup is not going to work in which case you should get out of it. Unless
I'm missing another possibility, both options point to the same conclusion -
you want to leave the startup behind.

In that case, tell your investors and give them the option that they can put
the remaining money into this side project or they can have the money
returned.

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cat9
Free users and paying users are often very different groups of people. Count
your chickens once they're generating actual revenue.

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calcsam
I stayed at a startup where I was early way too long even when was clear we
were headed into the ground. The most depressing five months of my life.

If it's clear you're doomed now, you should leave whenever something better
comes along. Your call on whether this is the new startup, or something else.

------
issa
To quote Mitch Hedberg: "My roommate said to me, 'I'm gonna go shave and use
the shower; does anyone need to use the bathroom?' It's like some weird ass
quiz where he reveals the answer first."

You have a problem and a solution in this post.

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rhartsock423
While I do not have any first hand experience with this, I have heard/read
from several sources that a co-founder bailing on their own company can be a
big mark against your reputation in the future.

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brianwawok
Your 1 mil will be out in 9 months? Slow the burn and find a way to make the
current company work.

