5 ms·

Ask HN: Failing startup, how to leave?

I am in a complex situation and would like to hear your opinion on how to proceed. I am a cofounder (4 friends from college) of a startup, at first we had great progress with the development of the product (i am one of the hardware developer). We started almost 13 month ago, but till this day we don't have a clear understanding who our customer are or how large the market we target is. When I point out one of these open points(there are many more), I am referred to some google research, which is supposedly completely bulletproof. I think my co-founders are blinded by all those unicorns out there, they think everything is going great and there are only little problems on the way before they get rich. I would like to leave, but I don't want to be the one getting blamed, when the company finally goes bust. How can I handle the situation?

konradb 6y ago
Why do you believe you would be blamed when the company finally goes bust? Would this blame matter because of your friendship with your cofounders? Or does their blame affect you in some other way?
- thingchattooga 6y ago
  Because in the past I've been held responsible as the bearer of bad news. And I don't want to jeopardize my friendship with the co-founders.
  - _ah 6y ago
    When you go into business with friends, you are already jeopardizing your friendship. That particular ship has sailed. You now have an option to (1) do what's right for you, and (2) potentially have some friends at the end of it. BTW it's not guaranteed that you can have either of these, let alone both. If you are convinced that you want to leave, I think the best way to phrase it is "I no longer believe that the direction we're headed is the right one. You deserve a co-founder who is all in and believes in the mission. Even though I know this will be painful for everyone, the best path for the rest of you is if I leave now." Expect to give up most or all of your equity position, and maybe stay working a little longer than you'd like to get things wrapped up and in a good place to hand off. Also expect that this won't work and everyone will still be mad at you, but you'll learn a lot and your conscience will be clear. Maybe someday your friends will stop being upset and will realize that you were right, and you can be friends again. No guarantees though. Best of luck to you.
    - wolco 6y ago
      Why give up all of your equity ? As a founder you created something, shouldn't you insist on a buyout?
      - rckoepke 6y ago
        Maybe there's not really a legal way to protect any of your equity assets when they aren't worth anything. I'd imagine any future investor interest would be scared off by the disclosure that there's an uninvolved past founder with "25% equity" on the cap table. Rather than worry about potential last minute negotiations with the ex-founder after an investor expresses interest, I'd imagine the remaining partners could potentially found a new group and dissolve the current group by "selling" it and all assets to the new group for $1 and mail the ex-founder $0.25 or something. This would likely be moderately illegal if done at a stage that the equity is demonstrably worth something (e.g. Eduardo Saverin's FB situation) but I don't think it would be much of an civil/legal issue before the startup had any demonstrable financial value. I could be wrong. And people will diverge widely on how they see the moral/ethical implications of this.
        wolco 6y ago
        It's interesting. If there is a later sale at say facebook scale you could have a case. After spending a year building the product I would hate to walk away.
        thingchattooga 6y ago
        I think that if they are really going to turn what we currently have into a company on facebook scale, then this value will have to be created after I leave. Right now, the startup is certainly worth almost nothing.
    - hkiely 6y ago
      This is 100% true if you did not do your due diligence before you all committed to whatever you are building. One of the best ideas is to hire someone like me who has failed at building something and helped other people try and iron out some of the unanswered questions. Someone else already mentioned this. He is likely just as capable. It may take a fresh set of eyes and a fresh outside voice. I can point you to other people as well. The actual potential market size may not matter. It is never a great idea to build a business from the top down. Instead, build from the bottom up by seeing if you can sell your product to whoever you think is the customer. The true test is right there. If you cannot get all of the stakeholders to the table due to needed partnerships, it provides another precautionary red flag.
Jugurtha 6y ago
>but till this day we don't have a clear understanding who our customer are or how large the market we target is. When I point out one of these open points(there are many more) The startup is about to die and you guys are pointing out the cause of death, googling shit, and already divvying up blame inheritance? Get out there. List your assumptions, meet people, try to get paid, get told your product sucks, get proven right or wrong, repeat. >I would like to leave, but I don't want to be the one getting blamed, when the company finally goes bust. How can I handle the situation? Which situation? Leaving or making saving your startup? If you'd like to leave, just leave. Just ask yourself if you've given it a real shot.
codegeek 6y ago
"started almost 13 month ago, but till this day we don't have a clear understanding who our customer are" This takes time but the key is that all of you as cofounder need to make this a priority. I literally was thinking who the heck is my target customer today and I have been running a bootstrapped company for almost 6 years BUT the point is that you have to constantly refine that as needed. Honestly, if you cofounders don't understand that it is all about identifying the market and the whole "product market fit" thing, it will be over anyway.
pbjtime1 6y ago
"I think my co-founders are blinded by all those unicorns out there, they think everything is going great and there are only little problems on the way before they get rich" A start-up is about bringing something its founders are passionate about to market. Anyone who thinks a start-up are a way to make money, are in start-ups for the wrong reasons. This sentence has failed start-up all over it. The mindset that also comes with this idea generally leads to alot of burn out for those passionate and those who are feet up lets get rich with minimal effort. Which is was the fate of my start-up experience. 3 of 5 founders were passionate and hardworking, and 2 of 5 considered it a 'side thing' contributing much less (and even nothing when half-assed). When time came to find buyers to start cycles of improving the product e.g.'fitting the niche of our product', things fell apart. The same 3 of us called out that we are failing and don't see a path, and the 2 others completely did not see the death of the company/idea in front of them. We had majority and dissolved the company.
- pbjtime1 6y ago
  As for the ruining your friendship with the founders, not sure you can avoid this. To me if they de-friend you for pointing out facts, then they were not your friends in the first place. I am still very close friends with one of my ex-cofounders. Maybe that my comment is pessimistic, but from my perspective start ups are an experience in failing. The difference here is, if you choose to continue failing with these 'friends/cofounders' or make a call it quits. 13 months is a short life of a startup, but really this is the decision that you and only you can make. No one but you has the perspective and knowledge to make such a call.
rudimental 6y ago
It sounds complex. At any moment, you have 3 options. You can accept it, change it, or leave it. Do you have paying customers? If so, that's not a bad start. Do your potential customers pay to solve the problem you are trying to solve? That's also not a bad start. Have you considered hiring a consultant to help solve the problem, or to be the bearer of bad news (not having a clear understanding of your customer or the market)? I've helped people / companies figure out their target customer and what would solve their problems. Feel free to reach me at helpthingchat a.t gmail dot com if you'd like. As to leaving, you can find the best way to frame it, and then do it. If they're really your friends, they will accept it. If not, who cares what they think?
kowsheek 6y ago
Having been in this situation more than once (I caught the startup bug), I can tell you that there is no good way to leave an unsuccessful startup. What I learned is, my time is mine to protect and my skills are mine to dedicate where I see fit. Noone can oblige you to spend these things on what you don't want to. People will always blame others for their lack of application. If they were true entrepreneurs, they will find a replacement for you. But you are unique that you want to leave what is really a pet project (I've been in those too many times) and build a real business. You should! Don't worry about what others will think, you can't control that.

konradb 6y ago

Why do you believe you would be blamed when the company finally goes bust? Would this blame matter because of your friendship with your cofounders? Or does their blame affect you in some other way?

thingchattooga 6y ago
Because in the past I've been held responsible as the bearer of bad news. And I don't want to jeopardize my friendship with the co-founders.
- _ah 6y ago
  When you go into business with friends, you are already jeopardizing your friendship. That particular ship has sailed. You now have an option to (1) do what's right for you, and (2) potentially have some friends at the end of it. BTW it's not guaranteed that you can have either of these, let alone both. If you are convinced that you want to leave, I think the best way to phrase it is "I no longer believe that the direction we're headed is the right one. You deserve a co-founder who is all in and believes in the mission. Even though I know this will be painful for everyone, the best path for the rest of you is if I leave now." Expect to give up most or all of your equity position, and maybe stay working a little longer than you'd like to get things wrapped up and in a good place to hand off. Also expect that this won't work and everyone will still be mad at you, but you'll learn a lot and your conscience will be clear. Maybe someday your friends will stop being upset and will realize that you were right, and you can be friends again. No guarantees though. Best of luck to you.
  - wolco 6y ago
    Why give up all of your equity ? As a founder you created something, shouldn't you insist on a buyout?
    - rckoepke 6y ago
      Maybe there's not really a legal way to protect any of your equity assets when they aren't worth anything. I'd imagine any future investor interest would be scared off by the disclosure that there's an uninvolved past founder with "25% equity" on the cap table. Rather than worry about potential last minute negotiations with the ex-founder after an investor expresses interest, I'd imagine the remaining partners could potentially found a new group and dissolve the current group by "selling" it and all assets to the new group for $1 and mail the ex-founder $0.25 or something. This would likely be moderately illegal if done at a stage that the equity is demonstrably worth something (e.g. Eduardo Saverin's FB situation) but I don't think it would be much of an civil/legal issue before the startup had any demonstrable financial value. I could be wrong. And people will diverge widely on how they see the moral/ethical implications of this.
      - wolco 6y ago
        It's interesting. If there is a later sale at say facebook scale you could have a case. After spending a year building the product I would hate to walk away.
        thingchattooga 6y ago
        I think that if they are really going to turn what we currently have into a company on facebook scale, then this value will have to be created after I leave. Right now, the startup is certainly worth almost nothing.
  - hkiely 6y ago
    This is 100% true if you did not do your due diligence before you all committed to whatever you are building. One of the best ideas is to hire someone like me who has failed at building something and helped other people try and iron out some of the unanswered questions. Someone else already mentioned this. He is likely just as capable. It may take a fresh set of eyes and a fresh outside voice. I can point you to other people as well. The actual potential market size may not matter. It is never a great idea to build a business from the top down. Instead, build from the bottom up by seeing if you can sell your product to whoever you think is the customer. The true test is right there. If you cannot get all of the stakeholders to the table due to needed partnerships, it provides another precautionary red flag.

Jugurtha 6y ago

>but till this day we don't have a clear understanding who our customer are or how large the market we target is. When I point out one of these open points(there are many more) The startup is about to die and you guys are pointing out the cause of death, googling shit, and already divvying up blame inheritance? Get out there. List your assumptions, meet people, try to get paid, get told your product sucks, get proven right or wrong, repeat. >I would like to leave, but I don't want to be the one getting blamed, when the company finally goes bust. How can I handle the situation? Which situation? Leaving or making saving your startup? If you'd like to leave, just leave. Just ask yourself if you've given it a real shot.

codegeek 6y ago

"started almost 13 month ago, but till this day we don't have a clear understanding who our customer are" This takes time but the key is that all of you as cofounder need to make this a priority. I literally was thinking who the heck is my target customer today and I have been running a bootstrapped company for almost 6 years BUT the point is that you have to constantly refine that as needed. Honestly, if you cofounders don't understand that it is all about identifying the market and the whole "product market fit" thing, it will be over anyway.

pbjtime1 6y ago

"I think my co-founders are blinded by all those unicorns out there, they think everything is going great and there are only little problems on the way before they get rich" A start-up is about bringing something its founders are passionate about to market. Anyone who thinks a start-up are a way to make money, are in start-ups for the wrong reasons. This sentence has failed start-up all over it. The mindset that also comes with this idea generally leads to alot of burn out for those passionate and those who are feet up lets get rich with minimal effort. Which is was the fate of my start-up experience. 3 of 5 founders were passionate and hardworking, and 2 of 5 considered it a 'side thing' contributing much less (and even nothing when half-assed). When time came to find buyers to start cycles of improving the product e.g.'fitting the niche of our product', things fell apart. The same 3 of us called out that we are failing and don't see a path, and the 2 others completely did not see the death of the company/idea in front of them. We had majority and dissolved the company.

pbjtime1 6y ago
As for the ruining your friendship with the founders, not sure you can avoid this. To me if they de-friend you for pointing out facts, then they were not your friends in the first place. I am still very close friends with one of my ex-cofounders. Maybe that my comment is pessimistic, but from my perspective start ups are an experience in failing. The difference here is, if you choose to continue failing with these 'friends/cofounders' or make a call it quits. 13 months is a short life of a startup, but really this is the decision that you and only you can make. No one but you has the perspective and knowledge to make such a call.

rudimental 6y ago

It sounds complex. At any moment, you have 3 options. You can accept it, change it, or leave it. Do you have paying customers? If so, that's not a bad start. Do your potential customers pay to solve the problem you are trying to solve? That's also not a bad start. Have you considered hiring a consultant to help solve the problem, or to be the bearer of bad news (not having a clear understanding of your customer or the market)? I've helped people / companies figure out their target customer and what would solve their problems. Feel free to reach me at helpthingchat a.t gmail dot com if you'd like. As to leaving, you can find the best way to frame it, and then do it. If they're really your friends, they will accept it. If not, who cares what they think?

kowsheek 6y ago

Having been in this situation more than once (I caught the startup bug), I can tell you that there is no good way to leave an unsuccessful startup. What I learned is, my time is mine to protect and my skills are mine to dedicate where I see fit. Noone can oblige you to spend these things on what you don't want to. People will always blame others for their lack of application. If they were true entrepreneurs, they will find a replacement for you. But you are unique that you want to leave what is really a pet project (I've been in those too many times) and build a real business. You should! Don't worry about what others will think, you can't control that.