

Ask YC: Story for Forbes - What really happens when your startup fails? - wschroter

The last few inquiries I did on HN for Forbes stories had great results.  Would love to hear from you guys on this one...<p>I'm writing a story for Forbes about what really happens when your startup company fails.  I need to hear from entrepreneurs who have had failing startup companies with an honest explanation of how they were affected financially and emotionally.<p>The story looks to explore the difference between what potential entrepreneurs expect to go wrong and what really happens.  This isn't a postmortem on why your startup failed - it's a short summary of what was lost in the process and how you dealt with that loss.<p>Some basic questions -<p>- How did you expect the first few years of your startup company to go?<p>- What did you risk to launch your startup?<p>- What do you felt you lost when your startup company failed?<p>- How did you recoup from this loss?<p>- What advice would you give aspiring entrepreneurs launching their own startups?<p>Please respond to - wschroter &#60;at yahoo<p>About the Author<p>Wil Schroter is a serial entrepreneur and startup columnist.  His columns appear in Forbes and are syndicated in newspapers nationally through American City Business Journals.
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j2d2
Please post a link when this article is finished.

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dennykmiu
Wil - Recovery from failure is the most important survival skill for an
entrepreneur. I tried to summarize my own experience in the following. It is
really tough but it must be done. Hope it helps.

<http://www.lovemytool.com/blog/2007/10/riding-a-bike.html>

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Alex3917
A few years ago I heard a great lecture on this topic given by John Nesheim.
He was talking about how three times he's stood next to entrepreneurs while
they were on the phone calling their parents to tell them that they'd just
lost the family's retirement savings. He might have a couple of good stories
if you were to contact him.

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Brushfire
In my case, this has just happened (about 8 months ago).

I'll add some bullet points: \- I'm still in good spirits and not destitute.

\- Out of the last 5 employees, the majority are still friends, including my
partner in the venture. This seems to be rare to me, but perhaps not.

\- I am in a significant amount of personal debt. We did a few personal
guaranteed items from the LLC, and now I'm stuck with paying them, including
corporate credit card debt. The debt occurred when we were being a little
irrational about survival in the last 6 months. It was easy to do because we
were being led on a little by a big client. Overall, this debt is going to
keep me poor for a while and limits my new startup options some (but not a
lot).

\- The money invested by my family, friend, and contacts is now completely
lost. Software startups really have very few assets worth a damn afterwards. I
think most of them are OK with it, but they aren't happy with it, and likely
wont loan/invest money again anytime soon. In other words, most of my
potential startup cash pool has dried up for future startups.

\- I have an immense knowledge now of what it takes to make a business, a
software project, a success, and some huge pitfalls that we hit that we can
avoid next time. Hiring pitfalls are the most costly and damaging, especially
when they are programmers. Good programmers, on the other hand, can basically
save a company almost single handedly. We had one of each; unfortunately the
good came too late.

\- Immediately after we closed, I was terribly unmotivated to do anything.
Partly I think this comes with being burned out. I wouldn't call it
depression, but it wasn't far from that. I drank too much, and really didnt do
much except sometimes try to find a job and watch movies. Luckily I had some
investments that I sold that could sort of pay for my worthlessness during
this time.

\- Slowly I came out of that pseudo-depression, and I am now collecting my
ideas, plans for a new startup. This time I'm taking things a little slower. I
know I will hire employees a lot later, and look for investment a lot later.
That means the business will take longer to get running and gain traction, and
will be a side-project to my job for longer, but I don't have much choice
monetarily. I think it will benefit me in the end.

\- I wouldn't trade my experience for debt reduction -- What I went through
was kind of a form of an MBA crash course, and I think the experience will be
highly valuable in the future.

Hope this helps.

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wschroter
This is great - can you drop me an email at wschroter at yahoo so I can
follow-up?

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altay
When you're spending most of your waking hours on a startup, your personal
identity gets completely intertwined with your company's identity. So I think
the the most important part of recovery is to separate those things. The goal
is to internalize the distinction between "My company failed" and "I am a
failure."

Two things helped me reach this point after my first company fell apart.
First, I taught myself how to program. (I wasn't a hacker at the time.) No new
skill has made me feel more empowered. Second, I got a job with a big company,
where I was surrounded by a lot of people who -- to be totally frank --
weren't as ambitious or capable as I was. That experience was also very
empowering. I saw my strengths, whereas before I'd been dwelling on my
weaknesses.

I only lasted about a month at the big company before I got my mojo back and
thought, "screw this, time for another startup." =P

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wschroter
I've read a whole bunch of postmortems on TC and FoundRead that were great
case studies on the biz side, but I wanted to get more info about how the
entreps personally dealt with the companies. My experience is that failure is
never nearly as bad as you would think, but I would imagine others have had
very different experiences.

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swivelmaster
I was involved in a very small startup. There were three of us, and we didn't
release anything. What happened was that my cofounders decided that they would
have rather had someone else on the team than me because I didn't code (at the
time) and can be occasionally difficult to work with. Several months later
both of them, after failing to find another third person for the venture,
called it quits.

So the whole thing, which was based on my idea from the start, failed. This
was in mid-January.

The way it happened, however, gave me a great deal of what I would call
"negative inspiration." When I first got the news that I was off the team, I
spent a weekend away to relax and collect my thoughts. When I got back, I went
to the library and checked out books on programming, called and emailed
several contacts who I had talked about working with before, and got to work.
I learned PHP and started writing a Facebook app, talked with the CEO of a
video game art outsourcing company about working on a spinoff project, and
talked with some young founders I had met along the way about joining their
teams.

It's a great way to harness energy (though I wouldn't recommend the way it
happened to anyone): I ended up in a state of "Oh yeah? I can't program? We'll
see about that!" and had a working prototype of a Facebook app coded from
scratch within two weekends (no fancy frameworks, which I now know is a stupid
idea but I wanted to do it more to learn the language). I worked my ass off on
the other fronts for several weeks, spinning plates left and right, while
taking extra work at my freelance/contract 'day job' running A/V at meetings
in the corporate penthouse of a very large company.

There was a bit of panic because I had expected some compensation for my first
startup which never arrived, so I had to borrow a bit of money - about a month
of living expenses.

About a month later, I started at my current job, which I love. I've learned
new skills on the job as well as sharpening old ones - as employee number 2 at
a startup, I can pick up tasks that interest me. I'm now coding in
Actionscript 3, RoR, and occasionally Java (with a few tiny bits of PHP and
Javascript here and there).

So it all worked out in the end. Though I'm disappointed that my original idea
and company didn't work out, I realize that it wouldn't have worked out
between the other members of the team and me anyway, even if I knew how to
code and wasn't occasionally a jerk about things. In that respect, I'm glad I
was out when I was and not later, because I would have been wasting my time.

(edited for grammar. COMMAS!)

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j2d2
I find the acceptance of failure quite interesting. I'm curious if people are
more likely to abandon a venture because they want to handle failure properly
and positively.

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echan00
I just wrote a blog post about my "failed startup"...

<http://airik.blogspot.com/2008/06/where-you-want-to-be.html>

It didn't work out from a business point of view, but it was probably the best
experience of my entire life. And in that sense, I feel like I succeeded.
Frankly, I'm quite proud of it.

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jdunck
What news regarding the story?

Link?

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RobertL
When all else fails you have to go look for a job.

I never really got emotional about failed startups. I just took the code and
the experience and used it as much as possible when I went on to the next
project.

This is one of the neat things about software development. When you are the
coder you own the code regardless of any agreements that were signed. They can
"sequester" the actual code on the hard drive. That's fine, but they can't
sequester what's in your head.

If your startup is an internet business or a software product then the worst
case scenario is that you will have a lot of code and a lot of knowledge for
jump starting your next startup.

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andresvi
Dude.... Wil Schroter... right now, when economy is down pretty much
everywhere around the world, is it really a good time to write a story about
why startups are failing? You should write about reasons why people should
start their own companies not vice versa! Don't you get it man? What's the
point of helping people to do worse? Screw your boss if he/she is behind it...
start your own Forbes magazine!

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wschroter
It's not about why startups are failing - it's about understanding exactly
what happens to you personally when they do. When I talk to a lot of people
about starting a company, they tend to be freaked out about "losing
everything". I try to explain to them that it's rarely as bad as they think
(the downside). Everyone I know that's "failed" has recovered in some way. But
my data set is limited, so I'm reaching out to get other's viewpoints.

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menloparkbum
I lost $30,000 of my own money when my startup failed back in the day. It kind
of sucked.

I could have used that money to get a master's degree, or put a down payment
on a house.

I didn't have to live on the street and go to soup kitchens, but startup
failure did set me back about 5 years economically. I had to work at jobs I
did not particularly enjoy, and live in shitty shared roommate situations for
longer than I would have liked in order to get out of debt.

If I had simply taken the job I was offered at Google way back when instead of
trying to do my own startup, I'd be as rich as Marissa Meyer right now.

So yeah it isn't that bad and you do recover but it isn't the greatest
experience.

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wschroter
If you'd be willing to share more details, pls email me wschroter at yahoo

