Sometimes being honest and taking care of your customer/employees/other stakeholders requires you to say "I don't know" or "this will be a change" instead of what you think they might like to hear.
It's almost always; a positive, reflective experience which dismisses any consequences to end users...
Here were my shutdown articles after I closed Staffjoy:
It's not that you've made nothing of value or that there was no need, it's simply that you weren't able to build a viable business from what you were doing. It doesn't even mean that nobody could build a viable business, it may be that your definition of viable is different from someone else's (e.g. minimum required growth numbers, desire for an acquisition, etc.).
There may have been a need and you may have created value but perhaps the need/value wasn’t viable at the target size set for the business by the founders and investors.
Maybe the business wouldn't be able to run profitably with anything less than 1000 users and one founder can't make it happen in their budget while another can, or another yet decides to raise money.
It is especially hard as the company is totally viable, in a great location in the world and has great customers who are really happy to keep giving me work, this means I cannot really shut-down until they are taken care of by either selling off the company to another programmer who will support them or transitioning them (very expensively I guess) to another system
I wonder how many people in the same position are thinking this far ahead
I've worked for larger corps for most of my career but have certainly cultivated the desire to be the maker of my own success. That being said, I've had remarkably little luck in finding any side effort enough traction to get off the ground, and hit my stride the most when I can improve a system with a proven value prop. (Without sugarcoating it, I'm a terrible "idea guy")
Later in my life if I get a degree of financial stability, I'd like to buy or work for a proven small company (working for would be hard but not impossible given the aforementioned desire to be the driver and recipient of the fruits of my labor) and taking over from someone in your situation sounds almost ideal.
The experience of dealing with "Jane the programmer" Vs dealing with "Outsourced software agency incorporated" is dramatically different.
I'm glad it's being thought about one way or another!
Customers first, employees second, founders third, investors last. You may want to think over why the last two are in that order, my reasons are simple: investors know the risks going in, and they will not eat one sandwich less. Founders need to be able to get on with their lives too.
You have to operate within the confines of the laws at each step, but if you don't take care of the employees before the founders and the investors, then they're going to get screwed the most.
My latest company started the same as all the others but ended up registered to varying degrees in four states, each with its own dissolution procedures. Never mind financing, vendor, customer, and other agreements that may be in play.
If you want to start a business and make money, do not rule out old economy, and bootstrapping. Whatever VCs say.
If you have profits sufficient to fund R&D you could also potentially approach your investors about buying them out with those profits. Something like "It has become apparent that this company is never going to provide the growth you are after. Instead, every quarter the company with pay you $X in exchange for N of your shares. After two years the company will have bought back the last of your shares and you will have twice your investment. We enjoy running the company and intend to do that for the foreseeable future despite the limited growth."
I know VCs are aiming for home runs and 10x+ returns but trying to get someone to shut down a business like that seems short-sighted.
I'm interested in the moral dilemma, especially regarding employees.
Aaron writes: "The biggest emotional investment that founders make – especially early on – is convincing great people to take a leap of faith and accept an offer to work their butts off on a long shot. This dynamic is why transparency around the decision to shutdown and the timeline of it is so important."
Imagine you're a founder and your company is on its last legs. You can make a last-ditch effort to pivot and save the company, but that means that if you fail, which is likely, your employees will get shafted. Can you really communicate this transparently to your employees, and risk having them start searching for a way out, dooming your chances to succeed in turning around the company?
I think investors should consider requiring founders prove they know how to shut down properly before giving money to grow in the first place.
Here are the basics:
-- what the ethical issues, how to "do the right thing"
-- how to shut down when they can still do so without debt being incurred.
-- what to say to which staff members and investors and when to say it
-- what the legal obligations are
-- how to either get acquihired, or how to find jobs for existing exployees
-- what legal bombs to avoid and how
-- what the biggest legals traps are in shutting down, such as leases which will remain fully payable
Maybe it would make sense for the investors to mentor them during the shutdown to make sure it is done correctly, since investors have been through it many more times.
How about "serialize"? As in "I'm a serial entrepreneur, so I'm serializing my current project, and spinning up a new one!"
You know, sometimes I forget that this stuff if just a "get rich quick" scheeme, but then an article like this comes along and reminds me.
Edit: the original title was 'Shutting Down'
In any case, YC partners quickly accumulate enormous experience from the failures of all the startups they’re helping. I bet Aaron has personally seen hundreds of startups fail, and has learned from every single failure in order to better help his next batch of startups. That experience probably eclipses whatever else he did before YC.
To me that’s YC’s biggest competitive advantage: they aggregate the learning experience of thousands of startup failures, and use it to keep their success rate above market.
In some ways it may be counterintuitive, but in others it makes sense. A successful founder only has a single anecdote. Someone running an incubator has something much closer to empirical data. You can only run 1 experiment at a time, while they can have hundreds or thousands.
Also, you don’t necessarily need talent executing in a specific domain in order to recognize it in others.
Fallout 76 seems to kinda suck, but that's one game.