4 ms·

For me, that's actually a surprisingly difficult question to answer. In retrospect, it's possible to pick some key moments that I wasn't aware of at the time.

by __d 9y ago

For me, that's actually a surprisingly difficult question to answer. In retrospect, it's possible to pick some key moments that I wasn't aware of at the time. The company ran for 10 years. The first 3 years we lived on ramen wages, revenue, and $450k of angel/seed money. We refined and extended the code, had some early-adopter customers, chased investment, and tried to pick a niche. Following promised money from some VCs, we threw a year's work into the (then very immature) mobile space with basically no traction, before reverting to the fintech world (which was where we had customers and product) with a $5M series A. The milestones on the series A tranches were to hire a management team, and get a launch customer for the fleshed-out product we'd pitched. The VCs put in one of their in-house interim CEOs to run things until we'd found the right team. It then took 18 high-spending months to find the wrong guy. The worst personal decision I made was to think the VCs were right, and that I (a geek founder) should hand over control to a "professional", so I could get back to coding. I believe that ultimately, that decision started the chain of events that doomed the company. If only I'd realised that then. The clearest realisation for me came during a small meeting with a handful of the execs. We had nearly 50 staff, an office on Union Square in NYC, some big name customers, and had burned through more than $50M in VC money but they were about to turn off the tap. I confronted the CFO asking what our monthly income was -- the real cash, not the prepaid licensing that was already spent, not the headline number that was then eaten up by us buying back services from the customers, etc, etc. It came to enough to pay about 8-10 people, depending on how much they were willing to cut their salaries. I proposed a list of the required roles: a CxO, a few devs, infrastructure, and support. I offered to resign, and suggested the best set of devs to carry on the product. We could sublet most of the office, and rebuild on revenues. Everyone in the room acted horrified, and came up with the most fantastic excuses as to why that (a) wasn't necessary, and (b) wouldn't work. I got out a month later, and they rode the company to bankruptcy a year later. During the 6 years in between, there were many times I doubted we would make it, and some when I thought we were doing ok. Hope and trust are both necessary to continue, and the reason for failing.

jtchang 9y ago
Wow this must be cathartic to even write. If you had a chance would you take the seed money again? How about the VC money?
- __d 9y ago
  The short answer is that I would be a lot more cautious about taking any investment now, and I tend to dismiss ideas that clearly don't lend themselves to bootstrapping. The biggest surprise to me about having VC investors was how "hands off" they were, and how much good money was thrown at us when I would have either refused to invest more, or insisted on keeping a much, much closer eye on where it went and how things were going. Our investors were not evil, quite the opposite. I don't know if they were lazy, trusting, optimistic -- I don't understand to this day. I think they'd have lost a lot less if they'd taken the time to investigate how things were really going rather than believing the pretty slideshows. I've heard/read plenty of horror stories where this wasn't the case, and investors were very intrusive and micro-managed things, but that wasn't my experience.
ephelant 9y ago
Thank you so much for that detailed reply, especially on so personal a topic. It's obvious from the question that it is a reflection on my current predicament. I'm at a place where the company is doing okay, but not great. Part of me wants to move on, but the other part - fuelled by legendary startup stories where things took off or turned around at the last minute - wants to keep going till it's officially dead. Before posting my question, I was debating whether asking the question itself served as a signal for my company's demise, but I am glad that didn't stop me. I feel like the point where I am too afraid to even consider the possibility - perhaps because then I truly know the answer - would be worse than just seeking more knowledge/wisdom. It's very useful to have a community where I can learn from very experienced people such as yourself and use that information to augment my knowledge. Thanks again for your thoughts.
- __d 9y ago
  That mythos of the startup was part of why I stayed so long, and worked so hard. Long after I'd been diluted to nothing, I still felt the desire to make it work, and the pressure of being one of the founders and having to seem upbeat and to find a positive way forward from every setback. I also think it's healthy to question the situation, privately, or between trusted colleagues. The failure to analyse, and plan, and act, meant that we continued down a path that clearly wasn't working long after we should have tweaked or pivoted. I think there's a delicate balance though between open discussion, and maintaining morale. My observation is that it's a personality thing: some people are fine with regular doubting and discussion, and are in fact re-energised by questioning the precepts and either confirming the current path or tweaking it to address an issue. Others find it terribly demotivating to think about this too often. I had always thought that there'd be clear point of success or failure, but my experience was that it was a very long period where it was neither yet, and impossible to tell which it would be :-)
  - ephelant 9y ago
    Yes, I agree that it's quite a balancing act. I find myself teetering between those two states, more often leaning on the pessimistic side of things which I may be incorrectly categorising as being realistic. I think I might just have to improve my communication with the team to show and explain both sides of my thinking, the good and the bad. You're last sentence really resonates as I think uncertainty is sometimes the most difficult thing to manage. There's always the possibility that death or success is just around the corner but I guess that is just part of the lifestyle I chose. Thank you very much for sharing your time and your story. You have given me a lot to ponder on :)

by __d 9y ago

jtchang 9y ago

Wow this must be cathartic to even write. If you had a chance would you take the seed money again? How about the VC money?

__d 9y ago
The short answer is that I would be a lot more cautious about taking any investment now, and I tend to dismiss ideas that clearly don't lend themselves to bootstrapping. The biggest surprise to me about having VC investors was how "hands off" they were, and how much good money was thrown at us when I would have either refused to invest more, or insisted on keeping a much, much closer eye on where it went and how things were going. Our investors were not evil, quite the opposite. I don't know if they were lazy, trusting, optimistic -- I don't understand to this day. I think they'd have lost a lot less if they'd taken the time to investigate how things were really going rather than believing the pretty slideshows. I've heard/read plenty of horror stories where this wasn't the case, and investors were very intrusive and micro-managed things, but that wasn't my experience.

ephelant 9y ago

Thank you so much for that detailed reply, especially on so personal a topic. It's obvious from the question that it is a reflection on my current predicament. I'm at a place where the company is doing okay, but not great. Part of me wants to move on, but the other part - fuelled by legendary startup stories where things took off or turned around at the last minute - wants to keep going till it's officially dead. Before posting my question, I was debating whether asking the question itself served as a signal for my company's demise, but I am glad that didn't stop me. I feel like the point where I am too afraid to even consider the possibility - perhaps because then I truly know the answer - would be worse than just seeking more knowledge/wisdom. It's very useful to have a community where I can learn from very experienced people such as yourself and use that information to augment my knowledge. Thanks again for your thoughts.

__d 9y ago
That mythos of the startup was part of why I stayed so long, and worked so hard. Long after I'd been diluted to nothing, I still felt the desire to make it work, and the pressure of being one of the founders and having to seem upbeat and to find a positive way forward from every setback. I also think it's healthy to question the situation, privately, or between trusted colleagues. The failure to analyse, and plan, and act, meant that we continued down a path that clearly wasn't working long after we should have tweaked or pivoted. I think there's a delicate balance though between open discussion, and maintaining morale. My observation is that it's a personality thing: some people are fine with regular doubting and discussion, and are in fact re-energised by questioning the precepts and either confirming the current path or tweaking it to address an issue. Others find it terribly demotivating to think about this too often. I had always thought that there'd be clear point of success or failure, but my experience was that it was a very long period where it was neither yet, and impossible to tell which it would be :-)
- ephelant 9y ago
  Yes, I agree that it's quite a balancing act. I find myself teetering between those two states, more often leaning on the pessimistic side of things which I may be incorrectly categorising as being realistic. I think I might just have to improve my communication with the team to show and explain both sides of my thinking, the good and the bad. You're last sentence really resonates as I think uncertainty is sometimes the most difficult thing to manage. There's always the possibility that death or success is just around the corner but I guess that is just part of the lifestyle I chose. Thank you very much for sharing your time and your story. You have given me a lot to ponder on :)