It's possible the founders took out a "small" chunk during their large funding round, but it is equally possible they didn't. Taking out a huge amount (>10% of

It's possible the founders took out a "small" chunk during their large funding round, but it is equally possible they didn't. Taking out a huge amount (>10% of your equity) would be bad signaling and investors wouldn't go for it, but a founder turning a few percent of their equity into cash to cover life expenses isn't a big deal. Sometimes founders will have gone years with little or no salary so recouping some of that is very understandable to the investors. Still though a lot of founders are what I'd consider irrational and don't want to sell any stock because of their belief in the company. I know multiple instances of founders turning down massive paydays during a secondary round because of course the stock is going to be worth so much more later (and as of yet none of them are wrong -- though I imagine in the future some will be). The founders and employees didn't get anything from their stock after Homejoy's sale. I highly doubt the founders ended up being "rich" from Homejoy. Maybe they are "rich" now that they are a YC partner. I don't know. But I don't know how those things would be related. Startups have a lot of luck. Just because a startup fails doesn't mean the founders weren't really good at it. It doesn't mean they aren't exceptional investors or startup advisors. It just means their startup didn't succeed. The reason websites like the OP are extremely stupid is because they distill down a startups failure to a bunch of points that if flipped around could be reasons for success for another startup. I worked for a company that was a direct competitor to many of these companies and their "Fatal Flaws" worked just fine for us. Yes, there are obviously better and worse decisions a startup can make, but everything is so context specific these general rules are worthless.