

Ask HN: Startup failing due to lack of business acumen, what can I salvage? - anonbcfail

Hey folks,<p>I cofounded a startup that makes a point of sale app a few years back, and we&#x27;ve made nearly  every mistake in the book. Hiring friends for key positions, never took any investment money or sought any out consistently, had cofounder drama, second system syndrome.<p>I&#x27;m the tech lead, and our product&#x27;s fundamentals are strong. We&#x27;re a solid alternative in our marketplace, even with two years development spent on a second system that was thrown away.<p>This time around, we&#x27;ve taken one punch too many. My current business partner pitched another company on providing us capital for referrals we can offer them, and drew up what looked like a realistic plan. That plan looks like it has quickly fallen apart, due to him not accounting for any debt service in our expense projections, as well as overestimating our ability to hire and train replacements as our sales department churned. Sales through last month were consistently 25-30 licenses of enterprise software, priced in the $1000s, and now we have approximately 2 in the first half of April, two weeks into replacing our sales staff that had us between 25-30 sales for 5 months. The other company&#x27;s initial payment that was intended to fund operations as we pivoted from a high license fee model to a monthly fee model, was instead spent on emergency debt service.<p>I&#x27;m at a loss because I&#x27;m at the end of my rope psychologically. I don&#x27;t have the energy to spend yet another year keeping the company&#x27;s head above water. At this point, I&#x27;d rather move on. Ideally, I&#x27;d find a buyer who will take on the company and give it the  love it deserves: I found out late last year that our cost per acquisition from Facebook ads was roughly $100 for a software license worth around $1000, so there&#x27;s a great business here. There just needs to be someone who can take charge of it, and fund it. How in the world would I even find that?
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smt88
You want to leave the company. That's understandable, and it sounds like you
should leave it.

But why does that mean the company needs new ownership? Is there not enough
cashflow for you to hire someone to manage the tech side of things?

You say your fundamentals are strong and you want to sell your equity in the
company. Maybe now is the time to see if you can get a private equity firm
involved.

I don't know what a deal might look like, but if your partner wants to stay
and you want to leave, he might be able to retain his stake while you sell
yours to the PE firm.

> _never took any investment money or sought any out consistently_

This is not a mistake in and of itself. The most success that is possible for
a startup is never taking money at all. However, it sounds like you went into
debt instead. That's certainly a higher-risk/higher-reward alternative to
taking investment.

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anonbcfail
Cash flow is _exactly_ the problem. We don't have enough in the bank to not be
staying up at night it if there's two bad weeks of sales. and there's not
enough infrastructure to disassemble to save money, especially with the burn-
out we've accumulated over the last year.

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anthonys
Is there anything more you can share in relation to the numbers to comment on?

Feel free to send me an email.

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Gustomaximus
> two weeks into replacing our sales staff that had us between 25-30 sales for
> 5 months

Are you able to make sales without staff contact? Or at least limit leads to
only the warmest and reduce personal contact? You might miss out on total
sales reached but if possible to automate this function you would remove a big
cost line and reduce a timesink?

Best of luck whatever you decide.

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davidw
This has some good advice:
[http://www.startupsfortherestofus.com/episodes/episode-197-h...](http://www.startupsfortherestofus.com/episodes/episode-197-how-
to-sell-a-web-application-with-guest-thomas-smale)

Also, I got a chuckle out of "confounded" startup.

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anonbcfail
Thanks, I'll give it a listen.

Heh, whoops! Ninja-edited it, though it's correct, I'm much more confounded
these days. :)

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sharemywin
How big is the market potential?

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anonbcfail
That's a hard question to answer because it's hard to quantify, point of sale
is a very large market. Along those lines, the central fact that drives me
nuts is in stable times, $3,000 in advertising is worth about $30,000 in
revenue.

