This situation is actually very simple, don't let it feel overcomplicated:
Tell them you need an actual salary and actual health insurance in the next 30 days. If the venture can pay you to keep at it, that's great. Otherwise you'll have to start looking around for a real job in a couple of weeks. Even the most brick-and-mortar type of businessperson will completely understand this.
Stick to your schedule. It will either work out or it won't.
If you've truly lost faith in the founders and business -- which you have -- you should leave now & cut your losses. It's not going to work out, regardless of salary.
As for how to make money after you leave -- get a job or find consulting work. Then jump back into starting a business when you're ready again.
Don't leave until you've clarified your equity stake and dotted all your Is and crossed all of your Ts. However, you should then cut your losses and get out of there. Half of a job is with whom you work and you've learned a great lesson with 'idiot' detection. I've worked with assholes recently, and they can actually be amazing assets at a company, but about 10 years ago I stopped working with idiots and I haven't looked back.
I'm starting a cloud company in Nairobi if you want to do something totally crazy ....
How are you going to make people pay for the clouds? Is this government-sponsored? Otherwise it sounds really cool, I've seen such climate improvement projects before, but I thought they require a huge scale (entire or several countries), can a single company really make a significant impact?
After seeing some downvotes, etc., I'm starting to think you mean a hosting company... Maybe the mention of Nairobi, Kenya made me think of clouds-as-in-water-vapor :)
Sod the legals, walk away, write it up to experience, re-tailor your CV and suck up a "proper" job (try looking for smaller companies through friends) for a year.
Talk to the people you meet and a new startup will come your way before that year's out.
I agree totally but i will add one more option based on this quote "I believe in our product, but I don't believe in our business model." If this is the case and assuming u have nailed a customer pain point down since its been 15 months, i would suggest that you leave and execute the same idea with the business model you believe will work. If you and the VC are on the same page and these guys don't have much tech experience then they are clearly failing to execute and no salary, health insurance, free lunch is going to make you happy. Since at the end, they are still driving you into a ditch. If no other VC's want to bite then scrap the idea.
Since you already are doing consulting on the side, i think you may be able to squeeze 3 months in on trying to get funding, just make every action Fast, Focused and Fundamental to your objectives. Godspeed!
It seems like you would be opening yourself up to lawsuits if you take this course of action and are successful. Not that I might not do it if I believed in something, but I'd want to be very careful.
If you're out of money it might be hard to pull this off as I've heard seeking funding is a full time job (or two, as your cofounders have shown) so the product has to be mostly good to go (for at least the time being) if that's going to work.
Using the product you already built with company funds is almost definitely off limits (IANL), so I'm not quite sure how that strategy could be feasible.
To not comment on the rest, since it's highly dependent on your personal situation:
"I feel as though I've invested too much time and energy to bail now."
This is a very dangerous way to think about it. This is your life you're investing here.
Perhaps to break it down to oversimplified but still valuable math:
(probability of success)*(personal outcome) = expected outcome
If you think they have a 10% chance of succeeding, but if they do they'll be legitimately worth $10M of which you'll get 30%, then the expectation value is $300k.
Do that calculation based on the numbers that you personally feel are correct. Compare to what you'd be making doing something else. Take into account that you've already worked on it for a year and a half, which is probably at least worth $100k. More since you may never get it.
If the project can't even meet that minimal standard for being worth your time, then you're unlikely to even make what you deserve for your time, much less receive a reward commensurate with your risk.
Better yet, here's a very relevant piece that tells you how to overcome the mental impediment to rationally considering situations with sunk costs involved. Basically, think about what you have to gain by changing things, rather than what you've already lost.
I remember working at a start-up and realizing what a huge portion of my personal wealth was stuck in it, and that I couldn't just quit.
Eventually I did quit, and everything was okay.
If this is your second job ever, then it's natural that you feel like this job represents a huge portion of your life's work. That's only true in that it represents your life's work up to that point. When you are 60, this will be something you see as a tiny portion of your work life. Eventually when you list the things you are most technically proud of (which you said you are), this probably won't make the top 5, because you will make so many more awesome things over the course of your career.
There was a play on Radio 4 a while back, where a guy orders a sandwich but it never arrives. Deciding that leaving would mean wasting the hour he's already waited, he stays in the cafe for years, waiting for the sandwich to arrive.
Read 'Eric Ries - The Lean Startup'. Your time at this startup is not necessarily wasted, if you've learnt stuff, networked, and somehow helped you get your next job.
> I feel as though I've invested too much time and energy to bail now.
I'm currently reading through "What I wish I knew when I was 20" by Tina Seelig (more entrepreneur-y than expected, but pretty good) and this exact topic is discussed in Chapter 5.
> […] “even great ideas require a tremendous amount of work to reach a successful outcome, it’s incredibly hard to know when to keep pushing on a problem, hoping for a breakthrough, and when to walk away. We all know that persistence is to be admired, but when does it become foolish to continue working on something that’s never going to fly? Gil Penchina, CEO of Wikia, describes the dilemma wonderfully: “If you throw gasoline on a log, all you get is a wet log. But if you throw gasoline on a small flame, you get an inferno.” That is, it’s important to know whether you’re putting energy into something that has the potential to pay off. This is one of life’s biggest challenges. We often stay in dead-end situations way too long. This occurs when companies commit to a doomed product or project, or when individuals stay with jobs or in relationships that make them miserable, hoping the situation will improve.
So how do you know when to quit? This is a huge philosophical question. It’s always a mammoth challenge to separate your desire to make something work from the reality of the probability that it will work. Of course, the more you put into a project, the more likely it is to succeed. But some efforts will never pan out, no matter how much time, money, or sweat is injected. The most scientific answer I’ve found is, listen to your gut and look at your alternatives. Essentially, you have to negotiate honestly with yourself. Do you have the fortitude to push through the problems in front of you to reach a successful outcome, or are you better off taking another path?
> So quitting is hard—but it’s even harder to do it well. I’ve seen people quit gracefully and others quit so clumsily that they leave a huge crater in their wake. As discussed in detail in chapter 8, you are likely to bump into the same people again and again in life, often in unexpected ways. This alone is reason enough to make sure that when you quit, you do so with careful thought about the consequences for those around you. Besides the impact that quitting gracefully might have on you later, it is just the right thing to do. You can never rationalize quitting in such a way that you hurt your colleagues, friends, or former business.
> A colleague told me about his assistant, who was doing a terrific job. He gave her great reviews and spent a lot of time talking with her about her career path within his group. She made it clear that ultimately she hoped to move into a different field, and my colleague was supportive of this. In fact, he told her he would be delighted to serve as a reference for her anytime. With this as a backdrop, my colleague couldn’t have been more surprised when his assistant came in one day and gave two weeks’ notice. The team was in the midst of a huge project, the deadline three weeks away. She was going to leave one week before the project was completed, putting the entire team in a very difficult position. My colleague asked her several times if she would consider staying one more week to help him get to the end of the project, which involved dozens of people directly and several thousands indirectly. She refused, saying, “I know you’re going to be unhappy that I’m leaving no matter when I go, so I decided to do what I want.”
> My colleague felt as though he’d been kicked in the stomach. It was nearly impossible to fill in the holes she left during the last week of the project, and everyone worked around the clock to try to fill the void. All those who worked with her will remember that decision. Despite the fact that she did a terrific job while she was with them, the damage she did to her reputation during the last weeks of her employment dwarfed all the positive things she had done in prior years.
In sharp contrast, I’ve seen others quit jobs with remarkable style. Even if they were leaving because the job wasn’t a good match, the grace with which they left made such a positive impression that everyone involved would be pleased to give them a glowing recommendation at any time in the future. They provided enough notice to fill any gaps, they took the time to put their work in order so that someone else could pick up where they left off, and they even offered to help with the transition. These folks are heroes. They mastered the art of quitting well, and used their skill to turn a bad situation into something positive.
Well, right, but what if that payment never comes? At what point do you say, "I will not make money here, I need to get a job to support myself?" When the company closes its doors (supposing it even has an office)?
Indeed. People generally understand when you tell them "I can't afford to live without a paycheck."
Ignore the rest of the things you're worried about, don't say anything about serious doubts or that you think they are idiots, just let them know it's not a viable for you to continue to work without pay. Keep it simple.
I've actually been in a very similar situation. I asked for the salary knowing they couldn't pay it and figuring it was my easiest way out without feeling like the bad guy. Hey, I just needed money and they couldn't pay it...Low and behold they unexpectedly accepted my offer. Good news, right? Not really...I wasn't happy, and after getting the salary I felt even more stuck than I was before. Get out while you still can.
I believe this is excellent advice you got here. Nothing much to add but that you take your girlfriend and go somewhere for at least a week or so, to clear your mind. Go to some national park or something like that where you would be disconnected, talk to her and not just about you, hear what she is seeing and thinking.
I am pretty certain when you come back you would know much better what to do.
Just to echo this: I was in a similar situation and did this (though without asking for healthcare) and it was the best decision I made throughout the course of the experience. Everything crystalized pretty quickly that they didn't have a plan to pay me and I was able to get out without burning through the rest of my bank account.
The bottom line is that we all have bills to pay. Get a consulting or contract job and continue with the venture in your spare time until either the founders raise enough investment money to pay your salary or you decide they won't be able to pull it off.
Be open and honest - just tell them that you need a salary. Going a year and a half with no salary is not something anybody has a right to expect from you unless you're already wealthy.
Take it from someone who "stuck with it" for 8 years hoping my co-founder(s) would stop being idiots and worrying about the time and energy i had invested. The best thing you can do right now, is get out of there, and get out fast.
They will never change. You'll spend your whole life getting them to be less idiotic, and it will NEVER happen. No matter how good the product, how good the idea, how good the business, how much the money and how much your passion; if you do not have a team that you have any faith in, every step forward will always result in two steps backwards.
I'm a self-certified expert in team dysfunctions and i'm telling you categorically, that a dysfunctional team can never make it, despite what anyone will ever say to you or whatever ounce of hope you may have.
I'm on skype or available via email if you want to speak further. Let me make it clear, i'll be pretty harsh with you, because i rather see you wince a little now, than die inside a few years later.
You've gained a whole load of experience. Value it and cherish it. The experience is worth far more than the time invested and the product.
Let it go. Move on.
The only way to get out of a rut is to take a step back and JUMP!
> I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now.
You've got to let go of this attitude. If you cling to it, then you will never leave, even if your co-founders are idiots and the business is a failure. What you need to do is quit as soon as possible. Only then can you start on a better endeavor and improve your quality of life.
I once heard someone say, "Give up on crap." It may sound juvenile, and it goes against the rosy, feel-good "Never give up" pep talks that we're used to and almost expect to hear. But I've found it to be a much better guide in life decisions. Go with it.
It's easy to presume that sunk costs should have no weight when considering the relative value of different options.
For many endeavours a certain amount of investment is required before returns are seen - investments in time and money in particular. For this reason there is almost always a cost to be considered switching between endeavours.
So, while I agree that throwing good money after bad is a silly thing to do, the consideration should be how much more investment is needed to make this endeavour profitable vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
You shouldn't weight how much has already been spent in this consideration, however you have to understand the impact existing investment has had on the road to profitability.
Time and money already spent is a crude metric that lends itself to the Sunk Cost Fallacy, but considering the metric is not the same thing as falling victim to the fallacy.
[EDIT] The following comment explains this really well through an example:
I think you misunderstand sunk cost. Sunk cost basically just says to always employ a purely-forward-looking strategy when evaluating costs and benefits.
> vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
Wait, what are these two costs? Aren't they the same? Where did the cost of switching come from?
> I think you misunderstand sunk cost. Sunk cost basically just says to always employ a purely-forward-looking strategy when evaluating costs and benefits
I don't think I misunderstand sunk cost, but perhaps I didn't explain my point well enough.
I agree that you need to be forward looking, but whilst looking forward it can be important to consider existing investment. Existing investment is not ALWAYS worth nothing, so its value needs to be accounted for. Existing investment is also a metric that, whilst lending itself to entwining one in the Sunk Cost Fallacy, is an important part of answering the question "how much more investment is needed?"
The sunk cost fallacy applies in a situation where previous investment has been lost. The typical example is in gambling, where each spin of the wheel is independent of how much you have already lost on the table. When in a startup, however, previous investment is not necessarily lost, so switching to a new one is (typically) not the same as continuing one you have already invested in.
>> vs how much some other endeavour will take to become profitable AND how much it will cost to switch.
> Wait, what are these two costs? Aren't they the same? Where did the cost of switching come from?
The cost of switching is a way of characterising things like lost earnings and payouts that are not directly related to starting a new endeavour. They are typically, though not always, constant regardless of the new endeavour being considered, and so it makes sense to keep them separate.
Examples of switching costs:
* paying out a phone contract;
* loss of long service benefits (if someone is close to receiving long service benefits they will typically wait to receive them before switching jobs);
Are you disagreeing that investment is often needed in order to gain profit?
I definitely did not advocate gambling money away, but rather that "an objective view of the situation" requires you "to understand the impact existing investment has had on the road to profitability."
In a follow up to another comment in this thread, I specifically call out the difference between gambling, where (usually) any investment so far has no impact on future earnings; and investing (in particular investing in startups), where the time and money invested so far can have an impact on future earnings.
To be concrete, the next spin of the roulette table has no correlation to the amount of money you won or lost on the previous spin, but your chance of selling an app on the app store in the next month is directly correlated to how much of the app has been written already.
But if you think about it, you're probably going to need to work with them for a long while if you stay. So it's not the best idea to stay any longer if you don't respect your team.
This, to me, is most valid point. Even if the company does start putting cash in your wallet, if you don't believe in it, or the people leading it, or their business model, you're not going to be happy.
I left a start up despite dumping countless hours into it. I just didn't see it really going anywhere because our business side just wasn't well fleshed out and I knew I'd never really have the control I wanted based on the personality of the other founder.
A year later he's still at it and has made no progress. I gave up my founder's share for a more modest share. If the company ever goes anywhere I'll take my paycheck, but at this point I just consider that time to be a financial loss.
There are many ways to leave a company and still maintain the possibility for a payout for your work if it ever comes to that. If they're the types that would try to screw you over when you leave, then you probably should have left a while ago.
I agree with you. Plus we don't know the real story or from the other (the co-fos) points of view, it's hard to decide who are the real idiots, or to put it softly, who are the real masterminds. Especially being a founder, being able to work with any kinds of people is a must.
There's only one co-founder you can't get rid of. I've tried! (I haven't tried the obvious method, if only because it isn't obviously effective for this problem.)
This is very good advice, and there are a number of times in my career (and life, really) that I wish I had respected this mode of thinking. It didn't get through to me until I read it in a book about chess, actually. In the book the author warned that beginners get into trouble by paying attention to momentum. Instead, it suggested, it was better to look at the board each move as freshly as possible and ignore what happened to get it into that state because it was irrelevant.
More often than not, I think that's good advice for darned near everything. I'd say take a fresh look and weigh your options. If you didn't have a job right now is this the one you'd take? If not then stop! Because that's what you're doing every morning, you're taking this job for no better reason than you took it yesterday and the day before that.
Exactly. Just because you've spent the last year barely making ends meet, it doesn't mean that you have to spend another year in a similar situation.
Reassess what's important to you and go for it. You need to ensure that your own personal needs are taken care of first before others, and if that means leaving the startup behind, then so be it.
Two pieces of wisdom for you, and a bit of empathy:
1. If you think that there's a problem, there's a problem.
2. The best kind of family business is a sole proprietorship.
I was once the drummer in a touring rock band. We had a real shot, with significant milestones behind us. Unfortunately our weak link was an immature, melodramatic singer that was terrified of success. I stuck around for two years longer than I should have, feeling like I'd invested too much time and money. My ego and identity were tied to the project.
Well, surprise surprise: the band broke up, and it sucked. However, there's no question that I learned a huge amount and that it prepared me for everything (good and bad) that came after.
> I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now.
Well I think you found your problem right there. Whether or not, they're actual idiots, this is a problem you need to address. EIther get out of it or you need to find a way to respect them.
If you can't respect your co-founders, you're gonna have trouble working with them.
I came here to post this. Ultimately he needs to work out whether or not he can talk to his co-founders or not about this. If he can't it'll tear the relationship apart and it doesn't matter whether or not the company's making or losing money, without that respect he'll have nothing but pain, tears and resentment.
Stop wringing your hands over this and leave this venture. Don't worry about hurt feelings. Move on with your life. Get a job that brings in some income. Do it for the sake of your sanity and your relationships with loved ones.
The difference between a business and a social club is making payroll. Your organization has not become a business until it does so; as soon as it fails to make payroll, it is an ex-business. This applies even to a one-person operation, where the rule is called "Pay Yourself First".
If you have to invest your own cash to pay your living expenses, then do so up front, in a planned, structured amount, get equity for it, and pay your salary out of that fund.
If you aren't paying yourself or getting paid, you aren't working at a failed business, you're unemployed at a non-business. This makes your decision to stay and restructure or bail a practical rather than emotional one: is making your own payroll until things might work out at all viable financially? Will it make you do things you don't want to, or can't afford to, do?
This has nothing to do with not trusting your family; I grew up with parents who ran their own business, and religiously maintained separate business and family accounts, paying themselves (and later, me and other non-family employees) salaries. I've seen the results of small partnerships and family businesses that didn't do this; it isn't pretty even when it works.
I was in a very similar situation, I built a web-app pretty much exactly as my biz partners needed; I spent probably 15 months writing it. I put everything into this venture, I lived on my savings and drained my 401ks as a last ditch effort hoping things would turn around.
Guess what, never happened. My partners were idiots, they didn't want to do anything I suggest. I told them about TechStars Boulder at the start some 2.5 years ago now (I live in Denver), they didn't like the sound of it, didn't like having to give away equity for 'nothing in return'. Now, 2+ years later, the one remaining Biz partner wanted to do TechStars, is leaving his day job to put everything into this. I told him I simply couldn't take the time off to do it now, that time had past, I have a new fulltime job I love and there is no way I'd jeopardize it for our startup now (turns out he applied and we were turned down anyway, probably for the best).
Unfortunately sometimes you just have the wrong partner(s), it's as simply as that. Why not get a full-time job and go into maintenance mode ont the startup? That's basically what I finally did. I told my remaining partner I can't live like this anymore, barely scraping by and that I was going to get a fulltime job and commit to them 100%. I will still fix bugs but as far as new features go, I simply tell him I won't add anything until he signs up 10 new accounts and pays me for my time now. Hasn't happened yet and he's been trying for about 6 months now focused on the business trying to sell accounts.
Be honest with them and tell them you can't live like this any more, you've kept your end of the deal, they are welcome to soldier on but you have your own responsibilities to take care of. You'll gladly help maintain what has been built, fix bugs and do what you can outside your normal 9-5 job, but otherwise you are going to have to focus on what's best for you and your family. If they are good people they will understand, if they are not, then you've done all you can and should feel fine with moving on and doing what you need to do.
I feel for you. I've been on the "idiot" side before but I understand where you're coming from. A couple things I'd have you do:
- Don't take advice from people who know very little and have no context.
- Clarify your ownership position in the company. "Can you explain my equity thing to me again?" Know what you own now. Know what you're entitled to in the future. If you already know this information, you can skip this step.
- Think of a person you completely trust and whose intellect you fully respect. Let's call them X. Sit down on your own and write X a letter that outlines the whole situation.
Address at least the following:
a) What you want out of the deal
b) What you think it'll take to make the deal successful
c) Conditions under which you're willing to keep at it
d) Whether or not you want to keep going forward with this thing
e) All the other important things that you know.
Make it a good letter. Spend real time on this letter. Something around 1,000 words or more.
Don't send letter. Save letter. Go to sleep.
- Next day (after you've slept and eaten), revise your letter. Really go through it and make it say what you want it to say. Take out that part that's irrelevant. Add the section about the thing you forgot.
Don't send letter. Save letter. Go to sleep.
- Next day, read letter. Revise it again if you need to.
Twist: The letter isn't for X. It's for you.
- At this point, you've built a clear inventory of what you own in the business and what you think needs to happen in order for it to work and for you to stay.
My guess is that you'll then know what you need to do. That might mean sit down and talk with the idiots. It might mean that you need to leave asap. It might mean an N day ultimatum. It might mean something else.
But whatever it means, it will have come from you.
Also, read this. I have it on the mirror in my bathroom.
You need to determine if the product/idea is actually viable and the problem is in fact that the other founders are failing to execute, or
the is is something inherently flawed with the business model. Have some entrepreneurs or VCs you trust and respect review the business and give you their opinion.
If the problem is the other founders, you could start talking with them about bringing on someone to turn the company around or about selling the company to someone else.
If the problem is the idea/product/business model, you should move on ASAP.
In either case, if there is some useful technology that can be repurposed for another idea/business, make sure you get a unlimited license or if the company folds, take ownership the IP assets as back unpaid salary.
Make sure you get the transfer of IP in writing, ideally reviewed by a lawyer. If you do build something successful with the IP, you don't want "the idiots" coming around and claiming they own part of it.
Everyone else has thoroughly covered the sunk costs and salary perspectives.
One thing I noticed in your post that I would strongly caution against: reading too much into VC rejection. I think you're placing too much faith into the VC's arguments and are being a little too sensitive to rejection. VC's are routinely wrong or misguided, and the vast majority of VCs do not deliver returns beyond that of the broader stock market.
Our first VC meetings were practice runs and a source of free high-value consulting. The very first one couldn't understand our product, so we knew we needed to edit. The second was excited but said we were in a great position to bootstrap. The third agreed and had some great suggestions that we took to heart.
We didn't need money at the time so it was not the same as your situation, but VC will often just not click with a company. It is actually a lot like dating in that they are trying to read the people and what they're saying and projecting it out over the course of the relationship.
They all came back, unsolicited, in 9 to 16 months, but by then we had reached a point where we were cash-flow positive and working with pilot customers to refine the product for launch.
VC will rarely say no directly because things can change at any time.
NB: This is Silly Valley, where VC are thick on the ground.
"I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now."
This is the feeling! I remember this.
Let me be extremely clear here: forget about your time investment. It does not matter. If you don't believe in the company and especially in your business partners, leave NOW. Each day you stay is delaying the next big step in your life that will get you to a better place and a happier life.
I've been there. Did it for years with the wrong partner because I didn't trust my gut and leave early on. I should have. I left after 5 years, abandoned all that work, and I've never made a better decision in my life.
Startups are hard, and they do have their ups and downs, but that is not how a startup is supposed to feel. Get out now.
There is one important rule all good poker players must learn:
It is never too late to fold.
Whatever your investment was, consider it lost. The experiences you gathered getting the stuff done are all you gained and nobody can take that away.
An ultimatum might give you the opportunity to negotiate rights to the assets you created during your work (If there is no formal incorporation yet you might own the stuff anyway).
I'm sure you'll find something worth your energy! Good Luck!
Honestly, the biggest asset I can see from your message is your girlfriend. Spend the next few days working on an awesome proposal, instead of working for people you don't respect any more.
The startup? Almost irrelevant, in comparison. When you look back on this in ten years, you'll agree with me!
After you've proposed, sit down with your fiancée (an awesome proposal is one where she can't say no!) and ask her what she honestly thinks of the business. Women are far better judges of these things than men - particularly men who are building the thing in question. If she doesn't think it's compelling, simply tell the other guys you are getting married and need a steady job, so you're leaving. You've learned a lot (about finding good co-founders, as well as al the tech stuff) and are a more valuable person because of it, so take that as your payment.
If she thinks the business is a great idea, things get more complicated. My suggestion would be leave, find a better co-founder, and start over. Or you could try to negotiate with the other guys for some up front payment and changes to the way they do things.
you said three things that I think are core to the issue.
1) You don't believe in the business model. Is that fixable? Are your co-founders similarly doubtful?
2) "I think my co-founders are idiots." If you actually believe that, quit. Right now.
3) "I feel as though I've invested too much time and energy to bail now." You should Google "sunk cost fallacy". If you buy stock in a company and it starts to tank, you should evaluate whether that stock with this new information is still the BEST place for your money. MANY investors don't do this-- instead, they get emotional and refuse to take a loss on a stock, hoping against hope that it'll bounce back. They should be saying, "with the information I have now, would I recommend that a friend buy the stock right now?". How much time you've invested should have NO BEARING on what you choose to do moving forward.
For your happiness, wealth, or whatever other goals you have, is this company the best way to be spending your time? If you could pretend that you weren't working with these guys and they approached you to be a co-founder RIGHT NOW, would you take the gig?
I really feel for you situation, and I would love to help by chatting. I've been involved in many different startups, from working with friends on no salary, to our current $12 mm series-A endeavor. I've seen tons of startups rise and fall, all sorts, and I think I may be able to lend some advice or just be a sounding board.
Please send me an email if you're interested: carter@gameclosure.com.
Can you make an amicable exit with some rights to the code? Seeing as you haven't been properly paid the copyrights or even the non-exclusive rights to it could be a fair exit and you say that you are proud of the technical solution. It's only relly worth it if you can see a business in it though or can pivot the work you have done.
It sounds like you have had an expensive lesson in picking partners, try to exit as cheaply as possible where the costs factored in include family relationships as well as your time. Others may also see the end but not want to be the one to call it but it is worth having a story for what you will do instead.
As others say forget about the sunk costs just optimise for the current situation and the future.
^This, there is nothing stopping you from looking for a greener pasture while still involved, when it arrives jump off the fence instead of sitting on it.
Everyone here can only judge your situation through your description of the situation and all the bias that comes from it.
From what I read, the rejection of a single VC meeting seems to have put you down. This is normal. Meeting 10-20 VCs before getting an investment is not unusual.
People here have nothing to loose so just take your time before shutting everything down.
Upvoted, even though I'm in the "get out!" brigade. It's hard for us to have perspective and we'll never have the full story.
All the same, a lot of us have experience falling prey to a sunk cost fallacy/gambler's fallacy situation, and I think anyone advising the OP to leave based on that has their heart in the right place.
TL;DR: advice from people on the internet is best ingested with a keg or two of salt.
> I think my co-founders are idiots, that they fouled up their side of the deal
If you are a startup founder, which it sounds like you are, and not an early employee at a startup, then this is unfortunately the wrong attitude to have. There is no "their side of the deal", you are all committed to making the business work and you should be prepared to do whatever it takes to make it work including pushing all your own personal boundaries in order to get shit done.
In my experience the startups that have performed the best are ones where all the founders are prepared to roll up their sleeves and do things they have no experience with if necessary. The ones that fail are the ones that squabble over who's messing up at "their part of the deal".
Too many times I've seen founders (especially tech founders) sit doe-eyed, waiting for someone else to set the direction, or raise money, or figure out the "business model". If this is you then you should look into joining another startup as an early employee rather than being a founder yourself.
If you objectively believe that your team does not have the skills necessary to succeed or even move on to the next step then you need to leave. Plain and simple.
But leave or stay, lose the attitude that certain things are above or beneath your ability to do, or even worse: "not your job".
I've been in this situation before, also with my first startup. Bailing was the one of the best decisions I've ever made and gave me the emotional strength to evaluate who I want to keep in my circle of friends/professional network.
After I left I got a regular job with regular pay to get myself level financially and emotionally. After another year or so of that, I'm at a startup again. This time, with much more success.
I am in an almost identical situation myself and can empathise.
I came to the realisation that
* I no longer enjoy what I am doing
* I'm not particularly happy
* Going into the office is now a chore
* I can't see a future where I am at the moment.
Once I realised all of these things - it took a few months - alarm bells started going off. I have now started to make steps to change my situation:
* Seen my Lawyer
* Written and dispensed my resume
* Spoken to friends about jobs.
I'm now much more comfortable, knowing that I can survive without the company and will probably be much better off without it.
Man, I've felt your pain. This quote gave my stomach knots:
"I respond half-jokingly that every day is either the best or worst day of my life, that I've experienced the highest highs and lowest lows of my short career"...
That is the most accurate depiction of startup life in my experience. Many times it is unfortunate. Many times it is euphoric. I wrote one of my mentors an email similar to that very recently.
Lots of people here are giving you advice like you asked - do this, do that. I'm not wise enough to tell you what to do. I'll only say this, you seem to love the product you are building, so there is something in this endeavor worth while. Obviously, you need money to live. You need to eat and have health insurance. That is your life we're talking about.
The stress is sometimes nearly unbearable, and you feel like you are all alone when you talk to your "normal" friends. But look at this section, 150+ comments from people who understand the stress, the frustration, the highs & lows. You're not alone. You can make it.
I was very recently in your position. My advice to you:
Get the f* out... NOW!
If I had to guess, you were probably never that impressed/excited by your co-founders to begin with. But you did it because the business-case made sense. That's what I did, anyways, and it was one of the biggest mistakes I've ever made.
If you think your co-founders are idiots, then it's over. If your experience is anything like mine, then not only are these guys not pulling their weight, but they probably have a lot of half-cocked ideas that you have to fight them on, they go off doing things that make no business sense, and have made you feel embarrassed for them (and your company) on more than one occasion.
In my case, I considered leaving my startup at the 15 month mark (and even before that), but hung around some more trying to make things work with co-founders who weren't doing their part. I had a very candid talk with them (not the first one either), laid out the things that needed to happen for me to keep going within what time frame, and everyone agreed.
Well, I did my part. They didn't. I knew, deep down, that they wouldn't hold up their end. If they were the type to do their part, they would've done it a long time ago. Denial is what kept me going for that last push, and it was a total waste of time and effort.
So I left. The co-founders balked, then got angry, then tried to get me to come back. I did not waiver. You shouldn't either.
The co-founders got over it. We worked out an agreement. We're still friends and things are fine. It will be fine for you too.
Now that I'm out, I'm watching their ship sink faster than ever. And I'm so glad that I'm not on it.
Hope my story helped you in some way. It was therapeutic for me. :) Now, get yourself out of there!
Also, framing the problem a different way helped me put things in perspective.
"Given what I know now, if I wasn't already a part of this startup, would I join today?"
If the answer is "no", then you know what you have to do.
"...I feel as though I've invested too much time and energy to bail now."
Unless you feel there's a realistic chance of success within the timeframe that your personal situation allows, you should bail. Don't let the past trap your future.
"I've learned more in the last year than I have at any other point in my life, and I've become a better programmer and designer. I've always said that even if this doesn't work out, I'll have become a better, more capable professional in the end. And I feel that I have."
And you no doubt are! I'm not sure where you are, but there are tons of companies in SF/Silicon Valley with 6-50 employees, VC funding, etc that will pay relocation and a nice salary for a versatile full-stack developer with demonstrable skills. There may be a startup in the future, but there's no shame in using the skills you developed at this startup to get a nice job for a year or two. The choice isn't between BigCo and no salary frustrationsville.
This is exactly what I wanted to say in response to his penultimate question:
"I can't imagine working for a big corporation again, but should I just give it up and get a "normal" job for a little while to build up some savings again before embarking on the next venture?"
There are plenty of small venture-backed startups that will pay you a good salary if you have the right skills. You just need to find the right fit.
If you don't respect your co-founders then you need to either address the fundamental interpersonal issues or quit. Everything else is an excuse.
If you choose the former, it should start with a frank but non-confrontational conversation among all of you where you discuss what is and isn't working with your relationship. Don't overfocus on the business. The day-to-day of a startup grows from the relationship among the co-founders. That's always at the root.
For example, if the business model isn't working, why don't you have a relationship where you can say "Guys, this business model isn't working. We have to do something different. Let's figure this out."? Over-focusing on the business will result in a laundry-list conversation when everyone just unloads their grievances all at once. It's not productive.
If going into the conversation you feel the urge to let your co-founders "have a piece of your mind" then don't have the conversation. You need to be calm, in control, and aware of the real source of your own frustrations.
Most likely there's a long series of missed-but-unstated expectations, both big and small. You have to acknowledge your own responsibility in this situation, viz., as a co-founder you have a responsibility to bring these up the second they happen to avoid a "blow up" situation. Yet here you are, in just such a situation. You're partially responsible for that, whether your co-founders are actually idiots or not.
You have to be prepared for your co-founders to feel similarly about you. Avoid the trap of allowing the conversation to become a tit for tat. "You forgot to publish that blog post." "Yeah, well, you forgot to follow up with a potential investor!" etc.
It might help to reframe this conversation from one where you're going to tell them all the things that aren't working to one where you ask for help with the things you think aren't working. If you don't want your co-founders to be defensive then you need to be vulnerable -- probably much more vulnerable than you're comfortable being.
I've been around these kind of situations. What started as a hackathon project, where we had 1 bizdev, 1 health tech related person (non-coder/technical) and me, the programmer. There were a few flaws in the plan, both conceptual and technical needed to actually turn the concept into viable product. It seemed like raising VC funding was the "goal" more than creating a MVP for beta-launch and customer feedback.
My best advice is to be direct, and take care of yourself personally, especially physical and mental health.
Everyone seems to be talking about "sunk cost" here. But it seems like you're working on a product that believe in. Is it possible for you to disrupt the company's current trajectory and try to get things onto a better course?
If your co-founders are doing things wrong, perhaps you can do some research into their side of things and figure out how to do things better. Teach them things, and learn together. Do their jobs for them if you have to. Since they are family, perhaps they will be easier to persuade?
Respect is at the center of this issue. If you feel you have been disrespected (knowingly or unknowingly), you need to bring that up. At the same time, if you have lost respect, you need to communicate that to the other co-founders. I wrote a post about communication that talks about this in detail - read here: http://www.pranavpiyush.com/communication-for-startup-co-fou...
Either way, communicate! Put it all out there. If, even then, things don't seem like working out (i.e. the other 2 don't see a problem that needs solving), then leave.
As for what you do next, don't start a business for the sake of starting a business. Do it if you have a vision for what the world should look like. If you believe in the vision strongly enough, nothing can get in the way of you building the product/company to fulfill it. If not, don't fret. Working for a corporation is not the end of the world.
I know why you wrote it. You know what you should do, but you are on the fence about it, or maybe don't want to, and you want us to tell you what you already know.
> with two very non-technical [!] family members [!] (blue-collar "businessy guys")
There are two big warning sign that things will go wrong in the first paragraph: if you end up doing business with family members, only do so if: (1) you really value their technical skills or (2) if they have real objectively proven business skills and proven ability to raise money or finance from their pockets or (3) if you've done business with them before and it worked out well for you.
...if neither (1), (2) or (3) is the case, stay tf away from any business with family members because, when shit hits the fan (and in the OP's case it has!), you will not be able to do what you have to do in order to save either the business or your professional life. But again, even if one of the three points is valid for you, don't start an IT businesses with family members - a corner-shop restaurant, a local racketeering mob... maybe... but not in this field unless they also have good technical skill (you already have enough tension between technical and non-technical cofounders in a regular startup, you don't want to put a potential propane tank on the campfire too).
I notice no mention of sales. Are your cofounders able to sell the product, if raising investment is not going well?
Have you actually launched? Are you close to launch? Real sales and real feedback from real customers is really the only way to validate what you're doing. A year is a long time to build something without real customers - if you don't have customers who believe in the product, there's no reason you should either.
Don't get emotional about sunk costs - It happens because we are all human, but will not benefit you.
Take a small break - Focus on the present parameters, analyze all your options (other than giving up), give it a fresh look. One can make very bad decisions when emotionally compromised.
Be honest with your co-founders, and it seems that you haven't been speaking to them candidly.
Ask for a salary and set a deadline for them and for yourself. Beyond that just leave. I would not expect a market-linked salary at a startup , but I would definitely not like to work for free or with a salary that makes me struggle with my basic financial requirement.
Remember, you made an investment - in terms of time and effort - Calculate the financial value of the time you spent (like what you would have got in an average job otherwise).
Check if you are getting fair enough equity - for all your investment
You feel like "giving up", but if you have to do that, do it gracefully - give it very detailed attention, Work out all options in a comfortable timeline - and may be then if still doesnt look good - leave.
Believe me, "i gave up" will stay with you for your lifetime, if you din't try all the other options before that.
The "sunk costs" situation is actually a little more complex than it might seem at first:
It looks like you have invested time and money in this opportunity and you ask yourself if it is likely to pay off. The intuition to stick to it even if there are hard times does actually have a sensible foundation: If the business took off in a couple of months without you being part of it, you would probably regret having left it.
So what you really want to evaluate is the likelihood of the business taking off within a timeframe that's tolerable for you. Startups have the property that not all progress is immediately rewarded. Some companies have to go through tough times until they hit gold. You now have to decide whether you think you have such a company or not.
As you obviously have more knowledge about your own situation/company than I do I can't assist you directly in that decision.
However, I remember reading a rule of thumb that if a startup does not have any significant traction (users or customers) 1.5 to 2 years after its foundation it is likely that there is something wrong with the business or product. I think this may have some truth in it.
"I believe in our product, but I don't believe in our business model." Then tell your business partners that THEY need to fix the business models so THEY can afford to pay YOU.
"I think my co-founders are idiots, that they fouled up their side of the deal," Ask them to give up some of their equity so that you can use it to motivate a replacement candidate.
"but I feel as though I've invested too much time and energy to bail now." Ouch, you're fucked. NEVER EVER let past mistakes ruin your future.
How about making a list of all the things you learned during this venture and a second list of all the things you can do in the future if you sever ties now. That way, if someone asks you in the future, you can explain on a positive note why it was the right thing to go.
However, all of these business projects also involve a lot of luck: I was once working on and off on a project for 3 years and gradually losing faith in the business model. And then all of a sudden, the project was reviewed without my knowledge by a local newspaper. We got a huge spike in traffic, sales started to explode and throughout one week, i was more than rewarded for all the hard work.
After 15 months, you should be able to evaluate where you are. Have you launched yet? If the answer is no, then you've likely let the project spiral out of control. After 15 months, if you don't have what you consider an MVP, then you need to stop, and take a hard look at what is really needed and not. I don't know what you're developing, but it's probably time to strip out any half-developed features, and release what is left as a product.
If you have launched, then you need to have a talk with your other founders. Not about raising money (because that may never come).. but about the financial goals of the company; revenue growth rate; profit; etc, etc, etc. At what point are you going to meet those targets? At what point will there be money for a paycheck?
If the only financial goals you guys have is to raise cash for a project that will never pull in a dime, then forget it.. it's not a business.. it's a toy. Businesses exist to make money. You should have a solid plan for how you're going to do that from the very beginning.
I know how you feel. Been there, done that. Let me say that its not your fault. You went in with the best interest in succeeding, but things went south. Your focus now should be on you. Not the business, but you. You don't owe them anything. Its time you focused on what is best for you. Its obvious you want to quit. Do so. Whatever happens, cannot be worse than what you are going through right now. Don't trap yourself into thinking about what if the company succeeds after you leave. Its not worth it. You can't continue living like this, in hopes of a better future. Truth is, the company has a slim chance of succeeding. And without you, it has less of a chance. So quit. Move on. Get your health back in order, and get a well paying job as a programmer. (look for the hiring thread on HN, or at indeed.com). Remember, money is nothing without health. You must be mentally healthy in order to be able to enjoy it. If anything, just shoot me an email. I will gladly listen to you. Best wishes.
I empathize. (With everything except the cofounders' idiocy, I absolutely love mine) I was brought in with my brother(MBA), we've been working on our web app for almost 10 months, and it's grown and morphed and changed more than we could have predicted. It's the first startup for any of us. The lack of salary is tough, particularly in silicon valley... but the ups and downs, the "best day or worst day of my life" that happens over and over, is a big part of the excitement of a startup (and also what wears me down the most). We are trying to figure out our future, and if our venture is something we can push on a little more for or if we should be getting jobs where we can work on our stuff on the side until it gains enough traction to raise capital or starts generating strong enough revenues. I'd be interested to know what you end up doing and if you ultimately have any advice... pm me when you make the decision if you feel so inclined.
I am making a some assumptions in this advice I'm giving you. You should get out, I understand you have invested the time and effort. But if they can't carry their weight, there is a lot of potential risk for the future.
"I think my co-founders are idiots". What are your expectations of them for the future. Do you see them becoming geniuses? Staying in with the expectations that a bad player will become a good player is an insane risk for you.
If this start-up becomes big, how stake in the company are divided will become a huge pain point. They are going to want more than they deserve. I've been around plenty of people who are all talk and heard many horror stories. I'm fortunate not to be burned but I've made a strong effort to surrounded myself with the right people. I'm telling you this to minimize mistakes that may take a huge portion of your time. Time is the most valuable thing you have so spend it on projects and people that are worth it.
This is perfectly normal feeling and reaction: you just have an exceptionally long nerve. Many people would've quit from the dysfunctional culture much earlier.
You either own enough of the company so that you can decide to do things your way or you start demanding paychecks.
You make it or you break it, and when you're no longer so sure then it's the latter.
28. That's the number of times you used the word "I" in that diatribe.
I think your biggest problem is that you are clearly focused on your troubles, your finances, your work on the product.
To succeed you're going to have to focus on the needs of your potential customers which, experience tells me, is most difficult to do when you are in a difficult situation. If you have a long enough runway, I would suggest taking a few days off, then spending some time away from your cofounders and the computer and talk to potential customers. Do that for at least an entire week. It will completely change your perspective.
If your runway isn't long enough, get a job and work on this on the side. There are no shortage of ideas and regardless of what others tell you there will be another opportunity to pursue a startup and chances are you will be a lot wiser about it the next go-round.
Play this thought experiment in your head. Imagine:
1. you have not been involved in this company
2. you are approached to take over in the technical role given where it is
What are your thoughts?
Are you interested in participating.
It's a typical "sunk cost" decision.
From the tone of your note I would guess you would answer you should leave.
> I believe in our product, but I don't believe in our business model.
This sounds like you'd be okay if the business model was different. Tell them that either the business model changes or you're leaving. Then it's up to them whether you leave. You may or may not be able to negotiate interpersonal problems.
>> I've invested too much time and energy to bail now
Economics would tell you to ignore sunk costs. I sympathize with your emotional attachment to this project and like you, I would feel like I was failing if I "gave up" on the last 15 months. But that isn't what you're doing - you're just facing facts. If you can no longer make ends meet, you either need take a salary, or leave. Be honest with your co-founders: remind them that you were willing to take a huge gamble on the business and that you've gone 15 months without a salary. Give them an ultimatum: either they make it possible for you to get a salary now, or you go on your way. This way it's not a unilateral decision to leave, and if it's possible for you to stay, you get that chance.
Again, I sympathize with your situation and I wish you the best of luck!
Did you think that the non-tech people you picked would be great co-founders at the time (whom you now consider idiots)? Or did you think that they'd be useful in getting funding (which they failed to do anyway)?
You say that you've become a better programmer, and are proud of your product. It's the business model that stinks, right? If product is all you care about, why aren't you working on an open source project? You'll constantly get developer reviews and user feedback and can build a truly fantastic product. If business model/ funding is secondary ("let's just pull in a couple of idiots who'll take care of it for me"), you really shouldn't be starting up.
Okay, you're already here and want to know what to do now. Cut your losses and get out. Now. Get your shit together and figure out what you want to do.
"I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now."
If they are idiots, then the only rational choice is to cut your losses. The size of your investment has zero impact on their ability to turn things around.
You have lost faith in your business model, this sounds like a common problem with many startups. Trying to build a startup (that is indeed a company) with a weak business model or inexistent and have faith to raise enough funds to survive for long.
You had bad luck and I surely do not know all the info but if you do not trust the monetization model it might be because it was never clear from the beginning, and do not forget, startups are companies and companies make money.
If you feel so frustrated just jump form the ship before it sinks, i have shut down startups because i didn't feel we would be able to make money (luckily we were always very early stage).
Saving yourself is always better than collective suicide.
Go be an employee at a startup that's a real business. A real business is a business that's established enough to pay you a fair salary and benefits.
It should be a job that you enjoy, and similar enough to what you're working on now that you can apply your experience. The people in charge should be businessmen who understand that cash needs to flow in order for this to be a real business.
At this point, you've worked with clowns long enough to know how to weed them out. During your job search, a lot of clowns will try to justify not paying you a decent salary. You've already been there, and know that a business that can't pay you isn't a real business.
Have you considered freelancing ? It may provides a salary, with enough free time to keep going on the project without having to sacrifice your free time. You may also learn from it the basic of business, which can help understand or argue with your cofounders.
This would send a clear message to them, too : your project is not my main one anymore because I can't get a living from it, and you're about to loose me.
You can then put a stop on new features building and only focus on bug fixing, until actual money is raised.
If they finally succeed, you can easily stop freelancing. And if they don't, you will have made contacts that make it easier to find a new job not on the corporate side.
Try and fix the problems yourself. If the problems are fixable, I'm sure you have insight into how to fix them. There's obviously something wrong with the situation.
If you can't fix the problems, leave. Don't fall into a sunken cost fallacy. Sometimes losing time and/or money is just a part of doing business. You took a risk. Risk is a part of life. But you should also learn to recognize when to cut losses and move on. You should sit down, decide upon what it will take for you to leave the company, and stick to the decision if it comes to pass.
I don't have any first hand experience with your issue, so take what I say with that in mind.
Looking ahead, you don't like your plan or your partners. I don't know how much of the IP is yours legally, but you can try to find a new partner or work on your own if you strongly believe in the product.
If you want to quit and don't want a "normal" job, consider going back to school. You might be able to quickly patch some holes in your education and meet potential cofounders for new projects.
One quote I like: "when all else is lost, the future remains." Good luck!
Your founders aren't necessarily idiots. Sometimes businesses fail due to a myriad of other issues, including market timing, product-market-fit and more.
This one failed. That's OK.
Time to move to greener pastures. No, you are not abandoning anyone. This business is dead. Unless a pile of cash shows-up and a major pivot happens it is likely not to survive. I've seen businesses implode even after getting piles of cash thrown at them. Money doesn't magically fix it.
Go find something that appeals to you and make some money.
Whenever in doubt of what to do always suggest to break the problem down. You are going through a lot right now so it's difficult to keep a clear head when making a decision. Take the time to go through the pro and con of leaving or staying and then see which one is more important to you. Also consider that psychologically when humans invest a
Lot of time and energy in anything it is difficult to let go (from relationships to startup). So don't allow it to be the only reason to stay.
This may be among the most stressful times in your life up to this point.
I would take almost all the advice in the thread, but just look at it from an outsiders perspective, and while that may not calm you, know that it will BE you soon enough.
The stressful times seem terrible, but as you stated, you learned a ton.
I have had my share of rueful experiences on the job or off, and the anxiety and stress regarding it slip away when you start making decisions and GETTING OUT OF THERE!
1) If this is your life and soul then find a job to support your self and keep working on this startup. Words like 'I can't imagine working for a big corp' are not going to help you at anytime in your life. You work to make your dreams come true.
2) You haven't been paid in 15 months, so what? Your co-founders haven't either. It's been 15months you should have already launched your product. It takes a team to get to where you want to go, stop blaming and start doing.
You're a part of a business that's failing. Don't get sucked into the dangerous mentality that what you're doing is something -more- than that - it's not. Startups are just small businesses. If yours is failing, then make a business decision and get out.
What you've done up to this point is a Sunk Cost. You can't get it back, so let it go. Your business isn't working and the co-owners can't hack it. So what are you still doing there?
> but I feel as though I've invested too much time and energy to bail now.
Sunken cost principle. Basic psychology is keeping you in a place you shouldn't be. Every day you'll have invested more,and it will only exacerbrate the issue. You said you don't like your cofounders. That should be a huge red flag right there.
If you can't carry on without them, you should find yourself a nice job and start plotting your next (successful) startup while you save.
I don't know what to do about your startup dilemma. It would have been wise to set a deadline (and communicate that to your partners) at the very beginning; hopefully you can do that next time. If you do leave, you said you "don't want to work for a big corporation again": if you'd prefer to consult for private clients, I've found oDesk to be a great place to find them. Just be selective in which jobs you bid on.
To use some poker wisdom, don't get pot-committed. The time you've invested thus far is a sunk cost that you're not getting back regardless of how much longer you stay on. At this point in time you need to assess the probability of future success and base your decision to stay purely on that. If you believe there is no benefit to be had by staying there, you need to get out now before you incur more 'losses'.
Get out. Your co-founders sound like hucksters and you're in the grip of the gambler's fallacy. The longer you wait the worse the inertia and eventual pain will be. Take the hit, walk away and make use of the positive things that came out of this: your skills, and the experience that will help you not get fooled again.
This isn't a business - it's three guys floundering around with no idea what you're doing. Walk away now.
That sounds harsh, but it's the truth and you've recognised it yourself. Forget your investment; it's gone and it isn't coming back no matter how hard you try.
Never ever ever EVER take non-science/engineer as co-founders. EVER.
I'm actually inclined to say not to hire either until you're profitable. Unless it's necessary by evil, like lawyers.
And by non-science, also include cultural science or political science.
You're being downvoted but I can definitely see where you're coming from. In the case of the OP, those two family member seem to actually exploit him pretty heavily, or at least they're not placing any actual value on him. I think a case could be made that non-technical co-founders are often prone to this kind of behavior, while the technical founder is slaving away and being called "just our IT guy". For most online startups, tech is actually an integral part of the execution, not something tedious that needs to be tacked on by some exchangeable and exploitable programmer.
I remember when we founded our first startup, it was three guys: the programmer (me), the business guy (a friend of mine), and our "account man" (an acquaintance of ours) - all equal shareholders. Shortly after founding, there was a discussion about having company cars. The two business guys wanted BMWs, and I was to get some cheap Japanese mini car. When I asked how they came to that idea, they explained that I was only the programmer and I could get by with basically nothing, whereas they insisted they needed BMWs for their role in the company. They also said, and I kid you not, that they were from wealthy families and I was not, so it seemed reasonable to them that everybody needed to keep their rightful place. Needless to say, I shot this down and shortly afterwards, the account guy left. It was for the best. Who knows what would have happened if I had let them get away with this.
Self-entitled, hypocritical, non-technical entrepreneurs. There are probably a lot of good people with non-technical qualifications out there, but it's easy to suddenly find yourself working with the bad ones.
That's a bad experience, but it could easily go the other way, eg. a technical person taking advantage of a non-technical founder. The key is trust, regardless of the personalities involved. Trust, but validate as the saying goes.
Leave now. Get a 9-5 for at least the next 6 months, which should give you enough time to get to back in the real world. Then, the world is at your keyboard!
If you don't have an IP clause in the contract, take the IP with you.
> I think my co-founders are idiots, that they fouled up their side of the deal, but I feel as though I've invested too much time and energy to bail now.
Sunk costs are sunk costs, and opportunity cost is very real. Don't sink more into it if you don't believe in the future of the product AND the team AND the company as a whole.
Wow, voted down? That's really what happened to me. If you haven't been paid, and they are constantly saying they will, then get out. They really aren't telling you the truth. You just have to cut your losses!
Don't be dragged down by the weight of your past decisions. Do what you need to be happy tomorrow. And from your post its pretty obvious to me what that would be.
You can always put the idea on hold for a while, and find regular work until you decide to go back to it. The work you put into it so far isn't going anywhere.
I totally relate to this story. I was in an identical position just over a year ago.
I spent 6 years co-founding a startup (though because of my age I was never recognised as a founder). I put so many hours into the software, evenings and even some weekends. The codebase was almost a work of art, built for the long term. And the business would have scaled up with the system I had built.
The directors however were clueless. For 2 years they didn't have a clue how to sell the product I have built. Even though it was clear as day to me how to take it to the market we were targeting. Eventually they cracked it and we started selling lots and, at the time I left, the firm was doing £1mil in revenue. It's probably a third higher by now.
It was my first job out of Uni. and in hindsight I was a bit naive. Though not entirely naive as I remember having many thoughts through the years thinking that things "didn't feel quite right". Something was off. I was putting in all this work to build an awesome product. And the directors/sales guys were putting in only a fraction of the effort, and always far away from hitting any high notes.
I learnt that one of the directors was siphoning out money of the firm into one of his other companies, through dodgy service contracts between the two. It seemed every month or two he'd start saying we're struggling to pay the bills even though we'd just made £60k that month on new customer sales alone. This was a 4 employee company making 60g's most months and it was just so obvious all was not as it seemed on the books. I once calculated the firm was making a clear £300k profit and yet I never saw a single penny of that through a dividend. Not even as a bonus.
Eventually I realised I could not stay there any more, despite having a small shareholding. I told them a year before I left that unless something big changes in the way things are run then I shall be leaving. Possibly a stupid move in hindsight as this pretty much put the nail in the coffin of my relationship with them and of course I didn't see any salary rise that year, not even inflationary.
I left on good'ish terms, even if one of the directors started an e-mail argument (a "see you in court" type affair) with me a few weeks later accusing me (falsely) of secretly starting up a rival company. Ludicrous.
I'm still recovering mentally from the whole experience. Obviously what I've shared here is barely a 5% of what went on. Some day I'll write an epic blog post about it I'm sure. I certainly went through some dark periods but I'm on the mend now and have learnt to channel it in such a way that I learn from it and to make me better equiped for the next time I do a startup.
The way I see it now is, those 6 years at this startup weren't a complete loss. Sure I didn't get to cash out my shareholding (though maybe some day I will, as the firm is still successful thanks to the product I built). But I was living at home and taking home £40k which is a lot for someone the age that I was. I saved pretty much 85% of my money and ended up with a huge deposit to put down on a London apartment. I moved to London early last year and have moved on with my life.
I would encourage the OP to break free. Don't take a month off or anything as that will only make you feel worse. The best thing you can do is get back on the horse, get a new job, maybe even move town/city if you have to. You need to press the gas pedal on your life for at least 6 months, that's what I did, to help you move on and forget. The worst thing you can do is quit the job and let off the gas pedal. That could have dire consequences for your mental health.
Here's the best strategy at this point. Talk to the VCs. Thank them for sharing their opinions. They did a good thing that a lot of investors don't do: they gave you an actual rejection, rather than wasting your time with "we just need more information" and indefinite deferral. Knowing nothing about your situation, it still sounds like you ended up meeting some good-apple VCs. Reach out to them and ask if there are any open positions in their portfolio companies that might give you the skills to create a more viable business in the future.
Don't let your co-founders know that you're doing this. They probably see those VCs (for rejecting them) as an enemy. They are, of course, the opposite. They did a really good thing by pushing you away from a bad idea. Not everyone in that world has the courage to reject someone (as opposed to delaying indefinitely, which has the same effect but is less honest). You should reach out to them for general career advice and see what happens.
Regardless of whether the VCs help you, it's time to wrap up your startup. Do any documentation work that's needed, get your specific equity amounts in writing (founders will often get resentful and try to steal your equity if you don't, and you won't get much sympathy from the courts if it's just a verbal agreement; that means you fucked up). Try to leave on good terms so you can keep a good reference, but don't hold high expectations because usually a startup breakup causes one side or the other to burn the bridge outright.
Good luck! This is not an easy thing to do. When you leave as a founder, it feels like defeat-- it's not just changing jobs, but it feels like you're admitting that you don't belong in charge. You can't let that get to you. You made some bad choices-- it sounds like your co-founders were not made of the right stuff-- but you've learned a lot, and now it's time to recover.
If you can get consulting work or a really good salary job (i.e. one that will improve your career, not waste your time) then that is the best way to move forward. I wouldn't recommend trying another startup for a few years. Startup failure is really hard to recover from; you need time and a low-stress environment.
I actually strongly (but respectfully) disagree with the advice about asking the VC for a position at a portfolio company.
VCs all know each other. If a startup's technical founder goes to a particular VC to let them know they're thinking of bailing, every other VC in the world (effectively) will have access to this information, and that company will never be able to raise funding.
If you're really committed to leaving (which is fine), I would cut ties with the company first, then start asking around. At least that way you don't leave the other founders in a weird limbo state where they effectively can't raise money.
Tell the other founders why you're leaving, and offer to introduce them to other technical people that may be interested in a consulting engagement / employment when they raise money.
I do, however, agree with the part about getting the paperwork in order. If they are successful in raising money after you leave, the other founders and future investors will likely do everything in their power to dilute your equity disproportionately. It would be worth the $500-$750 to talk to a lawyer and make sure all of your ducks are in a row.
Most of the time, advice that includes the words "don't let your co-founders know that you're doing this" is worth ignoring and that's certainly the case here.
The author appears to have marketable technical skills and should be able to spin his startup experience to his advantage. There's no reason he can't resign professionally and seek new opportunities without involving any of the people connected to his current company.
Alright homey, been in nearly your exact shoes- echoing the remarks of others here's what you do: OUT OUT OUT OUT OUT
You've been sold a bill of goods and it hasn't delivered, these startup ventures in some ways are "supposed" to hurt a bit but not like this. Get out yesterday and be firm with your decision.
It is soooo much easier said than done (esp on an internet forum) but here's a coping mechanism: 1) remember you absolutely do not need to line up another gig in order to leave this one- this sounds like a loser/sucker bet and you can fall back on side gigs; 2)The "family" aspect makes things tricky but luckily you can work or not work wherever you damn please.
The crucial thing is to stop the hemorrhaging ASAP, get the hell out pronto.
Caveat: Even if they come up with a way to pay you a BS-y salary, without knowing the specifics of this situation, from what you describe I still say it's time to hit the road and get on with your life and other ventures.
Is this anonymous copy-and-paste medium how people start to deal with their problems now? What happened to just talking to people or making tough decisions? I've seen more of these posts in the last year than I have in my entire time on HN.
I'm sorry you are having a tough time but you need to either 1) have a hard talk with your co-founders about your business model. present facts. make your case. they will listen.
or
2) if they dont, walk away and start something new. you mention you are a few years out of college. you could also go take all the technical experience you have gained over the last year and get another job. Make a decision on your own.
But really, the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd.
> Is this anonymous copy-and-paste medium how people start to deal with their problems now?
Yeah, isn't it awesome? There are sure worse ways to deal with difficult personal questions.
How did we do it before the internet and crowdsourcing? Oh yeah, there was a column in the newspaper called "Dear Abby". For the entire American syndication, she handled about two questions a day.
> What happened to just talking to people or making tough decisions?
I think he has been 'talking to people' because they've written him some checks.
> the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd
While not miracle advice, I cannot think of a better venue to ask startup-related questions. I don't know anyone in real life, none of my friends do this, etc. In contrast, a substantial portion (if not the majority?) of users here have been part of a startup, and have firsthand advice.
Sure, it's not miracle advice, but the fact that these are strangers on the internet is not sufficient to discount the wisdom that many here are willing to share.
I would agree, talking with the co-founders is the best route to go. Come up with good examples and/or comparisons for why you think the business model won't be a success but also propose a solution to what route you think the business should go.
Exactly. That's something you didn't mention in your story, and it is a crucial thing to do if you really believe that the product solves real problems. Don't let the unavoidable obstacles destroy your relationships. All of you are still learning (the brick&mortar business experience isn't that easy to transfer to tech startup) and that requires mistakes and dead-ends. You can treat your adventures so far as a lessons in Lean Startup fashion and check together if there's anything you all can improve.
Yes, I think after 15 months you should have a serious discussion with them. It might take a few days to agree on a plan. Make it clear you need income to go forward. They're probably thinking the same thing as you anyhow.
> Is this anonymous copy-and-paste medium how people start to deal with their problems now?
Obviously this person wanted some advice on their situation while remaining anonymous. I don't see a problem with being able to engage the community without having their name attached to it until they're ready to sit down and have a frank conversation with their co-founders.
> But really, the notion that a bunch of internet strangers will be able to give you some miracle advice is absurd.
I'm not sure how asking for advice is expecting "miracle" advice. There is a difference between the two.
I don't think it is entire absurd that internet strangers can give good advice. That said, it is entirely impossible when given no actual information or goals, just a scrawling whine.
Tell them you need an actual salary and actual health insurance in the next 30 days. If the venture can pay you to keep at it, that's great. Otherwise you'll have to start looking around for a real job in a couple of weeks. Even the most brick-and-mortar type of businessperson will completely understand this.
Stick to your schedule. It will either work out or it won't.
If it doesn't, no hard feelings.