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Ask HN: Failed startup, lost $110K need some advice

9 points by wheretonow 10y ago

My company/startup ended on the 90% side, about $110 in debt. Was trying to make it without VC money, but the company fell victim to our inexperience. Learned how hard it is to find help. Debates went on but no decisions were made. No proper wireframe we were winging the process with only one dev. What do I do now? Any one else on same boat? or have expreinced failure ? TL.DR; Failed startup, guy loses $110K need some sage advice

sumanthvepa 10y ago
Hard to give advice beyond the generic platitudes in a forum such as this. But some observations: Only one dev is not so much of a problem, provided that one dev is the founder and/or is seriously motivated. VC money or lack of it is also not a problem. VC is primarily only useful to acclerate growth not find product/market fit. Not being able to service your debt: That's fatal. So priority #1: get revenue to service the debt. If your company is not in a position to sell anything yet to service the debt, get a job and service the debt out of salary. Going forward, cut expenses, and keep the burn rate low or even zero. Then focus on revenue. Depending on your situation this may take anywhere from a few months to a year or two. Try and hang in there, but don't be irrational about it. If your exceeding your financial limits: stop and shutdown the business. Post-failure is not as bad as you might currently imagine it to be.
- nicholas73 10y ago
  I've lost over that amount in stocks before I learned to never invest in a company that is not making sales. It always takes longer than you think, and while you wait your investment declines in the form of dilution or debt. It's the same thing for your own startup. Do not take on debt unless you have a sale, and the debt is for fulfilling the order. On the brighter side, I eventually made the money back through my investments and you will do better next time. It seems in business there is no way to learn other than the hard way - I learned more about psychology than finance. Also, since you were extended credit, you probably are doing better financially than it sounds. That is, you have some asset backing the debt. So the greater challenge is forgiving yourself and moving on rather than the financials.
- wheretonow 10y ago
  Yeah I hear you. Started applying for jobs in (finance and accounting) my field prior to startup. Focusing on servicing the debt for now. Offering to do admin jobs on kijiji/craigslist, like writing up the plan etc, updating confluence stories and Jira tickets..
- wheretonow 10y ago
  Only part suck is living on a couch of someone. Premortem definitely helped. During the collapse, at times it felt like premonition, to the point that I could predict individual behavior to a proposal in company matters. Now, I am a operations and product pro, I learned tools like SQL, Jira and Confluence. I understand product cycle and met some of the most intelligent people and amazing engineers.
jeffmanu 10y ago
Yes I know the feeling. What I did was I found out the single most engaging feature/benefit of my product and built that into a business. I used contractors instead of a full team to lower costs and financed the startup from a salary I got from a new job. Email me at jeff@growingstartup.com if you have any other questions.
charlescearl 10y ago
Although I don't know your particularly situation and where you live, if you are US based you might want to consult an attorney or accountant who has worked with startups. One of the motivations behind bankruptcy (chpt 11 particularly) law was to mitigate the losses that entrepreneurs are likely to encounter given the risk that they take on -- at least this is what I've been told by accountants across the political spectrum. This may also address any personal financial losses that you may have encountered. Feel free to ignore the political dig but this is smart business apparently: https://www.washingtonpost.com/politics/2016/live-updates/general-election/real-time-fact-checking-and-analysis-of-the-first-presidential-debate/fact-check-has-trump-declared-bankruptcy-four-or-six-times/?utm_term=.fa29e3fb30be https://www.washingtonpost.com/politics/2016/live-updates/ge...

9 points by wheretonow 10y ago

sumanthvepa 10y ago

Hard to give advice beyond the generic platitudes in a forum such as this. But some observations: Only one dev is not so much of a problem, provided that one dev is the founder and/or is seriously motivated. VC money or lack of it is also not a problem. VC is primarily only useful to acclerate growth not find product/market fit. Not being able to service your debt: That's fatal. So priority #1: get revenue to service the debt. If your company is not in a position to sell anything yet to service the debt, get a job and service the debt out of salary. Going forward, cut expenses, and keep the burn rate low or even zero. Then focus on revenue. Depending on your situation this may take anywhere from a few months to a year or two. Try and hang in there, but don't be irrational about it. If your exceeding your financial limits: stop and shutdown the business. Post-failure is not as bad as you might currently imagine it to be.

nicholas73 10y ago
I've lost over that amount in stocks before I learned to never invest in a company that is not making sales. It always takes longer than you think, and while you wait your investment declines in the form of dilution or debt. It's the same thing for your own startup. Do not take on debt unless you have a sale, and the debt is for fulfilling the order. On the brighter side, I eventually made the money back through my investments and you will do better next time. It seems in business there is no way to learn other than the hard way - I learned more about psychology than finance. Also, since you were extended credit, you probably are doing better financially than it sounds. That is, you have some asset backing the debt. So the greater challenge is forgiving yourself and moving on rather than the financials.
wheretonow 10y ago
Yeah I hear you. Started applying for jobs in (finance and accounting) my field prior to startup. Focusing on servicing the debt for now. Offering to do admin jobs on kijiji/craigslist, like writing up the plan etc, updating confluence stories and Jira tickets..
wheretonow 10y ago
Only part suck is living on a couch of someone. Premortem definitely helped. During the collapse, at times it felt like premonition, to the point that I could predict individual behavior to a proposal in company matters. Now, I am a operations and product pro, I learned tools like SQL, Jira and Confluence. I understand product cycle and met some of the most intelligent people and amazing engineers.

jeffmanu 10y ago

Yes I know the feeling. What I did was I found out the single most engaging feature/benefit of my product and built that into a business. I used contractors instead of a full team to lower costs and financed the startup from a salary I got from a new job. Email me at jeff@growingstartup.com if you have any other questions.

charlescearl 10y ago

Although I don't know your particularly situation and where you live, if you are US based you might want to consult an attorney or accountant who has worked with startups. One of the motivations behind bankruptcy (chpt 11 particularly) law was to mitigate the losses that entrepreneurs are likely to encounter given the risk that they take on -- at least this is what I've been told by accountants across the political spectrum. This may also address any personal financial losses that you may have encountered. Feel free to ignore the political dig but this is smart business apparently: https://www.washingtonpost.com/politics/2016/live-updates/general-election/real-time-fact-checking-and-analysis-of-the-first-presidential-debate/fact-check-has-trump-declared-bankruptcy-four-or-six-times/?utm_term=.fa29e3fb30be https://www.washingtonpost.com/politics/2016/live-updates/ge...