
Ask HN: How do I explain “startup went bankrupt” to family and future employer? - wifinotfound
The founder and co-founders lied about raising capital. They burned too much money scaling the team before owning the product market fit. The founder went full retard and psycho last week. He spent the last few thousand dollars on weed.<p>I noticed our burn rate was higher than normal eight months ago with the lack of capital to get us through this year and confronted them about it. I started a recon mission when they didn&#x27;t give a clear answer.<p>One problem I&#x27;ve had so far is explaining why I&#x27;m leaving. I don&#x27;t want to come off as bad mouthing a past employer.
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pickle-wizard
I worked for a startup that went out of business. There is a whole of detail,
but basically the last client canceled the project and they ran out of money.
So I was laid off.

That is what I tell people. They understand that as companies run out of money
all the time. The important thing is that in my experience people take it at
face value.

What I don’t do is air the dirty laundry about how the company got into that
position in the first place.

Maybe a few years down the line I’ll tell people about it over beers as we are
exchanging war stories. However it is not some that you need to mention while
looking for another job.

~~~
jacurtis
This is really the most important advice in the entire feed here. "Don't air
the dirty laundry".

The founder might have gone "full retard and psycho", but that is something
you can keep between you and your friends/family, not your future employer.

Employers hire people all the time who are on the job market because their
previous employer went out of business or had layoffs. It doesn't make the
employee bad. Companies go out of business all the time, it is life.

The interviewer will want to know that you were not fired, and were in fact
laid off (which is basically what happened to you, when a company goes belly
up, all of its' employees are essentially laid off).

The interviewer might ask why the company went bankrupt if you are applying
for a position where you were in a responsibility to generate revenue (CEO,
COO, Salesman, etc). But will probably not dig any deeper if you are any other
type of employee (like a software developer for example).

If they do dig deeper about the company, just be honest to a point. Tell them
that your burn rate was too high for sales and the company couldn't land
contracts needed before the money dried up. There is no value in adding that
the founder was a dumbass, even if they were.

One valuable point you can throw in that will make you look good is that you
were kept until the very end. I would mention that. You were so essential,
important, good at your job, that your previous employer held onto you until
the very end. Even as the burn rate was too high and the company could have
fired you to save money, they didn't. They needed you until the company was
literally gone. That shows lots of value to future employers in how
indispensable you were at your previous job.

In fact for anyone who is interviewing, one important piece of advice is to
never be critical about past employers during an interview. I have interviewed
people who say their reason for leaving their last 5 jobs was all for
"personal differences with their manager". Well if you haven't gotten along
with your last 5 managers, what faith can I have that you can work with me or
your new manager? Don't blame other people, it really makes you look bad.

------
wheresvic1
I think you can be honest without badmouthing anyone necessarily: "startup
went bankrupt due to reasons beyond my control".

As for letting your startup founders know why you're leaving - it really
depends on your relationship with them but i would got for a professional -
"i'd like to expole other opportunities and i wish you all the very best!"

~~~
DoreenMichele
_" startup went bankrupt due to reasons beyond my control"_

Unless they had a position in the C suite, that can probably be shortened to
"Company went bankrupt" with zero further explanation volunteered. Though it
helps to think things through ahead of time and figure out how to address any
questions that may come up.

The most PC thing to say would be along the lines of "Starting a new business
is always a gamble and lots of new businesses simply don't succeed."

------
davesmith1983
Just tell the truth. Maybe leave out a few details like "The founder went full
retard and psycho and bought loads of drugs". How you say something is
probably more important than the fact themselves.

I would say something like:

> They (the startup) had problems with raising capital and expanded too fast
> and our founder seem to lack the dedication to run the the business and
> things fell apart despite my best efforts.

That is perfectly acceptable.

~~~
borski
Much better than that is simply:

> They (the startup) had problems with raising capital and expanded too fast.
> Things fell apart, despite my best efforts.

That doesn’t disparage anyone. Even if you want to, it can make you look bad,
and petty. One of the first thoughts that enters many people’s minds is “will
they disparage me if/when I fuck up?”

~~~
SkyMarshal
I would also leave out "despite my best efforts". That makes OP sounds like
they have a hero complex, as if they could have single-handedly saved the
startup somehow. If the founders are driving it into the ground there's
nothing the employees can do, and it's best not to come across as deluded
about that.

~~~
borski
Meh, I could see it both ways. There’s a difference between “I saw it sinking
and figured I’d ride it out collecting a paycheck” and “I tried my butt off to
do whatever I could to save it, along with everyone else, but the effort just
didn’t work.”

It’s all about how you say it. :)

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rdiddly
Hard, dumb, blanket rules are hard and dumb. You can talk about your previous
employers, if you do it right. More on that in a minute.

Plainly saying they went bankrupt is probably enough detail for most
interviewers. It's blunt and direct, yet vague enough to be somewhat
diplomatic. I certainly wouldn't feel ashamed about it. At the company level,
bankruptcy of a startup is actually the expected outcome, statistically
speaking. Shouldn't raise any eyebrows. And at the personal level, you even
tried to confront them about the burn rate, so you shouldn't have any personal
shame about it.

If somebody really presses you hard for why you thought the company failed,
just tell them what you told us, and qualify it as your own opinion: "I think
they probably burned too much money scaling the team before owning the product
market fit." Sounds like a reasonably intelligent analysis of what happened
(though personally I might question the use of the word "owning" just
stylistically speaking... maybe "finding" instead?).

You can make yourself look good here, or bad. If you're capable of formulating
a blame-free, diplomatic, equanimous (is that a word? I mean even-
tempered/calm/composed/having equanimity), intelligent, big-picture analysis
of why things went wrong, that makes you look good. If all you can manage are
self-centered, immature, emotional hissy-fits about perceived slights that
were of no particular consequence to anyone but you (small-picture), that
makes you look bad. Getting into the character flaws, dishonesty and/or
detailed mistakes of your management, is territory you want to avoid in an
interview because it tends to torpedo your chances instantly. That's the
reason the conventional wisdom is never to "badmouth" previous employers,
PERIOD. I would obviously refine that somewhat, as detailed above. Analysis
OK, gossipy shit-talk bad.

The person you're talking to is evaluating you, not your previous employer. If
they see before them someone with complaints, they'll assume you're just a
complainer, not someone with a legitimate complaint. Likewise if they see
before them someone from a bankrupt company who has a calm analytical big-
picture outlook, is a bit business-savvy, and has the company's best interests
at heart, they'll see it as a great opportunity for them.

------
partisan
First job?

Career advice: never bad mouth a former employer. Consider the perspective of
the person sitting across the table from you. Would you want to hire someone
who is negative?

Another piece of career advice: saying someone went 'retard' is not really
appropriate.

------
nicolethenerd
Startups fail all the time. Just say it didn't work out - you don't need to
give all the details.

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sys_64738
I used the generic 'time to move on' response. You don't owe anybody an
explanation for anything.

------
tootie
"Don't speak ill of past employers" is mostly a myth for me. Shitty companies
and shitty managers are not at all rare. Don't act salty or say they didn't
appreciate your genius, but if you can very clearly articulate what you
observed of their mismanagement and how they could have done better, that's
actually a great interview talking point.

~~~
inlined
In general though, candidates running towards an opportunity stand out amongst
candidates running away from a bad situation. When a candidate is focused on
the bad work environment they’re escaping, the interview is about the
candidate and not what they can do for the company.

------
mikasjoman
As someone who employs developers, I don't really even care why it went South
- well at least if you didn't wreck havvoc at the place. Startups are big
bets, and they mostly go south because most ideas don't work out. I would be
interested to hear what you learnt though - if you can reflect well on things
going south. What I really do care about is your skills and your ways of
working with colleagues. I care about technical know-how, clean
code/defensive/architecture, testing your code, awareness of non-functional
requirements and how you work to ensure your code doesn't suck or is even
dangerous to my clients/citizens, the ability to be a mench that contribute to
the team delivering. Those are my standard, and they have nothing to do with
your startup going south. So don't worry. I don't think any other managers
would care too much either.

------
TheMog
Are you leaving, or are has the company actually gone bankrupt and laid you
off.

If it's the latter, telling prospective employers that the company went
bankrupt and potentially mentioning that they couldn't secure another round of
funding should be more than enough.

If it's the former, it's trickier, especially if the company actually pulls
through.

Either way I'd tone down the analysis - as a sometimes hiring manager I might
be interested in your analysis that the company burned too much money, but not
so much in the "in-depth" analysis of the founder's behaviour.

BTW, I've had to close down a company before because it went bankrupt. I have
the utmost sympathy for the founder who spent the last couple of grand on
weed.

------
git-pull
Simply state it's a startup.

It implies there's a runway.

It's normal for startups to run out of capital.

Focus on technical aspects and cultural stuff that was functional. Like slack
/ github reviews / trips / etc.

It's okay to say if there were snacks / coffee machines you didn't like /
local restaurants in delivery range weren't good. Those are fair game. Snacks
imply you stay around and code :)

If interviewing for an employer not familiar with startups roles lasting
<three years, let them know the experimental nature of the space. Founders
move on/vc capital dries up because the market gets saturated (Imagine raising
for a rideshare / delivery up in 2010 vs 2019)

------
Ocerge
Startups failing is nothing new, if anything it would probably be seen as a
positive by most reasonable employers. Definitely leave out explanations as to
exactly why; "it just didn't grow fast enough" should be enough.

------
techslave
Just use the buzzword you cited and you’re good.

We failed to find a product-market fit.

I would literally say nothing else. Anything else you say _might_ be taken
negatively. Wait for a question and respond to it, if it even comes up. It
probably won’t.

------
robjan
Most startups fail and any reasonable employer will understand this. Usually,
though, it's best to frame it as a pull from your prospective employer rather
than a push from your current one.

------
midnightmonster
If the company is indeed dead, all the other answers that tell you to just say
"my employer went bankrupt" are correct. If you're asking about how to talk
about the reason for your job search before the company/your job is officially
dead, (for this one or for future reference in case) you can still be pretty
candid without telling unnecessary details.

"I've become concerned about the sustainability/prospects of the company" is
fine.

------
pm24601
Talk about:

* what you learned about the needs of the market

* how you adjusted the product to match the market

* what technical challenges you overcame

* how you adapted the product to handle a pivot

* dealing with not enough resources

Everything _except_ the cofounders. Your opinion about what they did.

It is unhelpful to talk about the drama in this startup.

If anyone asks about why you are leaving - the short answer is the best one:
product-market fit was not present. Do not be tempted to invite further
questions. No matter what those questions are not positive for you.

------
dyeje
There is nothing to explain. Startups go out of business all the time. You
simply tell them your last company ran out of money and you were laid off.

------
greybeardgeek
I've interviewed and hired hundreds of talented technical people and would
look favorably on a candidate that said they had concerns on the financial
viability of the company, and that the viability concerns were not related to
anything they could influence, such as product or service quality, and so
leaving was the best option.

------
readme
This is very easy.

Q. Why did you leave?

"The startup ran out of money."

Q. Was that you fault?

"I had no financial responsibilities in the company."

Now, if you did, that gets tougher...

------
hprotagonist
My pithy summary in interviews is “i worked for a startup that didn’t.”

------
NGRhodes
How about:

I lost confidence in the businesses ability to succeed, despite all my efforts
to help it grow. Further questions would hopefully allow you provide examples
of what an excellent employee you were.

------
icedchai
This is normal. All you need to say is the startup experienced financial
difficulty due to poor sales. You are concerned about job stability. No
further explanation is needed.

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AwesomeFaic
> He spent the last few thousand dollars on weed.

> I noticed our burn rate was higher than normal

Yeah I bet it was..

------
vikramkr
All you need to say is in the title of the post. "Company went bankrupt."

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letsgo-gb
Never complain. Just say that you wanted to move on to bigger and better
projects.

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fcarraldo
> The founder went full retard

This is not only unprofessional, but straight up offensive. If your demeanor
is even close to similar in conversations with other peers or prospective
employers, you will have a very difficult time being taken seriously.

~~~
brookside
Also I'm not even sure how this can be a real question.

Anybody who has the slightest understanding of startups knows the majority of
them cease to exist within a few years of founding. There is no complex
explanation needed beyond "the startup I was at closed its doors".

------
FreakLegion
> using the terms "psycho" vs especially "retard"

I agree with your advice about how to behave in professional settings. It's
worth pointing out though that 'full retard' is a decade-old meme from _Tropic
Thunder_. It's widely used in Internet culture, and while mildly off-color for
HN, isn't something to draw broad conclusions from. Here's the scene:

[https://www.youtube.com/watch?v=X6WHBO_Qc-Q](https://www.youtube.com/watch?v=X6WHBO_Qc-Q)

~~~
dang
We detached this subthread from
[https://news.ycombinator.com/item?id=20429149](https://news.ycombinator.com/item?id=20429149)
and marked it off-topic.

------
acjohnson55
The easy answer to your actual question is "job ended because company went
bankrupt". It happens all the time. It doesn't reflect poorly on employees.

The longer answer is the nature of your post makes me think you might have
some self work to do, which could be more helpful to your future prospects
than the fairly simple issue you're asking about. I don't know you, but using
the terms "psycho" vs especially "retard" to describe people in public makes
me think you should think hard about your communications patterns and your
internal mindset. And while being inside a failing company is stressful, to
the outside world, it's not a big deal. Don't bring that negativity with you
when you leave the company.

~~~
JetezLeLogin
Oh brother! This is kind of "concern-trolling" isn't it? "I'm concerned for
you." Also see: "I'll pray for you," which passive-aggressive religious people
say to simultaneously indicate that they disapprove of your (usually totally
harmless) activities that are supposedly going to lead to retributive
hellfire, and that they've got their act together more than you do.

language policing = religious righteousness

callouts = virtue signaling

"You might have some self work to do" = "I'll pray for you"

your future prospects = retributive hellfire

~~~
asdkhadsj
I disagree entirely. I feel like your parent comment was simply offering the
_(hopefully)_ obvious advice to not bring that negativity with them. The
parent comment was not preachy at all in my view, and the entire point of this
thread is communicating the previous companies lack of existence. We're here
to discuss communication. I don't think the parent comment was off this mark
at all.

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kevas
Failure isn’t something to be ashamed of, unless you keep failing for the same
reasons. Your startup’s bankruptcy has taught you valuable lessons. If any of
those lessons are applicable, discuss them.

Crap.... didn’t read past the title.

