27 ms·

If it isn't going to work, just shut it down

137 points by imartin2k 4y ago

rossdavidh 4y ago
For those who (like me) didn't get the reference, the "Ship of Theseus" is a thought problem about whether, if every part of the ship has individually been replaced, it remains the Ship of Theseus. https://en.wikipedia.org/wiki/Ship_of_Theseus https://en.wikipedia.org/wiki/Ship_of_Theseus
- jackweirdy 4y ago
  Is the ship of Theseus a single thought problem, or is it a different thought problem than when it was first thunk since all the present thinkers are different?
  - idoh 4y ago
    That's a funny joke. It does make me think about concepts and organizations and how they can drift. I don't think the Ship of Theseus has drifted much, but I think it totally applies to organizations and who is a member, e.g. people who supported the French Revolution / a school board / people who identify as liberal or conservative, etc.
  - Dylan16807 4y ago
    I know you're being flippant, but I don't know if you mean it, so I'll answer anyway: It's the same thought problem, because thought problems don't have to be embodied in anyone and it hasn't significantly changed. Also it's not the same actual thoughts across people, and basically never was. So there's nothing in here that's been slowly replaced piece by piece. The paradox does not apply to itself.
- yakshaving_jgt 4y ago
  Alternatively, Trigger's Broom. https://www.youtube.com/watch?v=LAh8HryVaeY https://www.youtube.com/watch?v=LAh8HryVaeY
  - cryptonector 4y ago
    Or Lincoln's ax.
- otikik 4y ago
  One of my favorite ones. It comes to "identity". What does it mean to "be" (or not to be)?
habitue 4y ago
What about the classic story of the AirBnB founders pivoting from selling cereal? It seems like the metric for whether you decide to pivot or shut down depends on how many rounds you've done and how many employees you have. Early on, couple of founders & handful of employees: maybe do whatever pivots you can to survive. If you're a big boat and pivoting will require firing 80% your staff and starting an entirely different product, maybe consider just shutting down. (If you've got solid revenue but are just unprofitable, none of this probably applies, you should try whatever you can to save the revenue stream)
- newbieuser 4y ago
  airbnb is a business model that has proven to be a great idea at one point. but I wonder if this is valid for every business idea? In other words, can every business model that has been followed for years be successful?
- fragmede 4y ago
  But selling repackaged cereal in cutesy boxes was never Airbnb’s long term plan. Can it be called a pivot at that point?
  - pfarrell 4y ago
    No it wasn’t Airbnb’s main line so I don’t consider it a pivot. I always thought it was a good lesson in being scrappy. They needed some cash, had a good random idea and did it as a side project to raise some money. In the end it became a great story of chutzpah too. Similar to how the band Vulfpeck found a loophole in Spotify’s terms and got a tour funded by publishing a silent album and getting their fan base to stream it at work.
  - lawl 4y ago
    I wouldnt consider it a pivot in that case. Some business plans feel like an onion, there's always a layer more to it.
tschellenbach 4y ago
My first startup went through 2 majors pivots and eventually did quite well. The most valuable bit though was the experience. Second startup is in great shape thanks to that experience. I think many founders give up too early. You wont learn if you don't go through some difficult experiences.
- bombcar 4y ago
  The pivot can be key - especially if you've built a team that can execute, identifying early that your plan won't work and pivoting to something else can help. And in the worst case, you've learned more.
- diob 4y ago
  Keep in mind survivorship bias though. There are probably loads who pivot multiple times yet still end in failure.
  - harpiaharpyja 4y ago
    It's tricky though, you often can't tell if you are in the survivor set or not until after all those attempts at perseverance. Its easy to assume that after N failures the company is not in the survivor set, but you can never actually know. So without perseverance, no one would be a survivor.
    - yrechtman 4y ago
      OP here. I think i mixed the message too much by putting pivots in the same category as founder transitions and down-rounds. Pivots are fine. But when you're basically just starting over on a completely new business with less money and a demoralized team, your likelihood of success is significantly impaired. Successful pivots need to carry ~something~ over of value
      - ncmncm 4y ago
        Yes. Letting them start over on something completely different is indulging sunk-cost fallacy. People were hired on the strength of being able to build X. If they are not who you would have picked to build Y, then getting them building Y anyway means you start out with a broken leg.
deleted 4y ago
[deleted]
RcouF1uZ4gsC 4y ago
On the other hand, Microsoft was just a BASIC vendor, Amazon was a bookseller, Netflix was mail oder DVD company. Sometimes if you have a really good team/organization it makes sense to pivot based on the market.
- Hasu 4y ago
  Microsoft's BASIC evolved into Visual Basic and still exists as the .NET platform. Amazon still sells books. Netflix still operates their mail order DVD company. All three do a bunch of other things now, but those products allowed the companies to grow and expand. I don't think expanding to other verticals is the same thing as a pivot, a pivot (imo) is when you entirely change your business strategy and product because the thing you were doing wasn't working. If you expand the definition of a pivot to any change in business strategy, then every company pivots all the time, and the term loses its meaning.
  - deleted 4y ago
    [deleted]
  - 015a 4y ago
    Yeah, and also; Amazon knew (or, at least, Bezos says he knew) from Day 1 that books were only the beginning. They started with books because they're an extremely broad category (hard to stock one Barns & Noble full of every book), easy to ship, and they have a practically unlimited shelf life (versus clothes/technology, which experiences seasonal trends, or even food; all of which Amazon now does). Big difference between "we think this is The Business, ope its not lets pivot" and "we think this is a good place to Start the Business and grow out of".
- idoh 4y ago
  Amazon always had ambitions to go beyond books, that's not a pivot.
  - hinkley 4y ago
    But cloud computing?
krallja 4y ago
This is the model of Noubar Afeyan’s Flagship Pioneering: place tons of little bets, give them enough money to falsify the hypothesis. Don’t even name the company yet. It’s just an experiment. If it won’t work, kill it and move to the next one. If it does work, call it Moderna and sell a billion mRNA COVID vaccines.
cryptica 4y ago
It is going to work. I can feel it in my gut. I just need to keep myself and a few of generations of my offspring working on it for 150 years or so. Easy peasy.
lakomen 4y ago
That is very bad advice. If I did shut evrything down once I hit some hard opposition, I'd never finish anything. The better advice is, try, fail, try again util you succeed. Success is overcoming obstacles.
- alx__ 4y ago
  I think the key part of that idea is learning from the failures. Analysis and objective opinions on what caused the failure
memish 4y ago
On the other hand, that advice would have killed off Tesla and SpaceX at least 15 years ago.
- ncmncm 4y ago
  We can dream.
  - dvt 4y ago
    What's up with the weird Elon hate recently? I don't care for the guy one way or another, but it's just bizarre. Plus, I have friends that worked for both Tesla and SpaceX and from what I hear, apart from being big and corporate-y, it's a pretty awesome place to be at.
    - christkv 4y ago
      He’s of the wrong tribe now it seems
      - ncmncm 4y ago
        No.
    - memish 4y ago
      He challenged the narrative and now he's a sworn enemy of the establishment.
      - ncmncm 4y ago
      - drewrv 4y ago
        The stuff he’s criticized for doesn’t “challenge” any narrative. It’s all self inflicted like lying about FSD or calling someone a “pedo”. And what do you consider “the establishment” to be exactly?
    - 4y ago
e-_pusher 4y ago
As always, all advice is wrong. While pivots are difficult to execute, many successful products came out of pivots like PowerPoint : https://en.wikipedia.org/wiki/Forethought,_Inc https://en.wikipedia.org/wiki/Forethought,_Inc.
TameAntelope 4y ago
What's the difference between a pivot and founding a new company? Sometimes your company has some baggage (messy cap table, bad hires, a down round, etc), and pivoting brings that baggage along. On the other hand, forming an entirely new company takes time and effort that may not be necessary. What do fundraising entities think when they see a company fold/exit somehow in a way that keeps the founder free, and the founder immediately found a "similar" company solving an "only" marginally different problem?
analog31 4y ago
Do investors have any evidence based reason to think a company has a better chance the second or third try, or a worse chance for that matter? Does past performance matter?
- cryptonector 4y ago
  So, I would think that startups do have a better chance on first and second pivot. After all, by the time it's time to pivot, the startup will have more staff than when it started, the social relationships will be established, and the staff's skills understood. It's a huge advantage compared to the day the startup is founded. > Does past performance matter? If a startup is pivoting, that means that "past performance" is negative. Does it say anything about future performance? Maybe it says "they'll fail and fail and fail again", or maybe it says "they've learned some lessons and now are staffed appropriately for a pivot". Investors have to put time in to understand what they might be investing in.
ncmncm 4y ago
Yes: e.g., Energy Vault (NRGV, $2B+) absolutely cannot work, and should be shut down immediately. Maybe give back whatever of the pigeons^Winvestors' money is left? Somebody should sue the founders for fraud. The crane thing was actively stupid, and very obviously could not ever have worked. An investor who bothered to consult literally any mechanical engineer would have run a mile. Lots did, of course. But somebody bade the thing up. The current "condominium for concrete blocks" scheme could probably be made to sort of work, for a while, until it breaks, but only at 100x the price of the storage that utilities will actually buy, instead, because they are not all complete idiots, and anyway have engineers on staff. I expect NRGV to pivot to orbital beamed solar power, next, or orbital mirrors to light up your solar farm at night. Anything that would take a long time to prove can't work would meet their needs.
- brazzy 4y ago
  Can you give a quick rundown why "the crane thing" could not ever have worked, and what exactly it was, separate from the "condominium for concrete blocks", which seems to be what is described in the Wikipedia article, but also uses cranes? As a non-mechanical engineer, it's not obvious to me.
  - flaviut 4y ago
    Compare it to water energy storage. Water is 1kg/L. Concrete is 2.4kg/L. Therefore, the volume of concrete lifted is 40% the volume of water you would need to store the same amount of energy. Here's the biggest water energy storage facility in the US: https://www.google.com/maps/place/Dominion+Bath+County+Pumped+Storage/@38.2077068,-79.8056835,15.29z/data=!4m5!3m4!1s0x884b61d899351679:0x7ad630ea3bb1e14f!8m2!3d38.2089249!4d-79.8000836 https://www.google.com/maps/place/Dominion+Bath+County+Pumpe... Cost of the water for that facility? $0/L. Equivalent cost for concrete? $0.15/L (https://www.google.com/search?q=concrete%20cost https://www.google.com/search?q=concrete%20cost) That facility has 14GL of water. Replacing that water with concrete, you get $2.1 billion dollars. Which, ya know, actually compares favorably with the $4 billion (2022 $) that the pumped hydro facility costs. But then you have to remember that the pumped storage facility has like a half-dozen or dozen pumps, and that probably made up a big fraction of the cost. The equivalent lifting block thing would have... like thousands or tens of thousands of the motor/generator devices. I can't imagine the cost.
icu 4y ago
Aren't investors really investing in the team talent to find pmf? In this case, is it practical to advise them to quit? If there's blood in the streets, it's just time to be a vampire.
nlh 4y ago
A great quote sticks in my mind, shared with me by a founder who was going through hard times with his startup. The company was going through a bad spot, and one of his investors suggested just giving up and returning the existing capital to the investors. An advisor then said: "It's not their money anymore. Don't you dare give up." He didn't, he persevered, and the company had a fine outcome years later. I would not blindly follow OP's advice.
- Ensorceled 4y ago
  > They shouldn’t go through down-rounds, cap table restructurings, multiple major pivots, or team transitions. After all that, is it even the same company? No. They should just shut down and start over. The article is talking about pivots not a lack perseverance ...
  - deleted 4y ago
    [deleted]
- pram 4y ago
  And that founders name? J. Robert Oppenheimer!
- user3939382 4y ago
  I burnt years of my life following advice like this when I was young and didn’t know better. If your formula is sufficiently wrong, which is the rule not the exception, you can’t make up for it with perseverance. There’s a selection bias in these stories you hear. Stories about people who gave it their all and failed aren’t popular.
  - anonymouse008 4y ago
    What would you do differently? How do you know now that you were wasting your time? These moments make you more powerful than ever to be able to articulate why those precious (auto corrected but worked) times were not the myths you heard.
lostgame 4y ago
Simply watching ‘Dragon’s Den’ will reveal how ludicrously passionate people are about some of the worst ideas. I don’t really agree with the article, though. If it’s not achieving the results you want, it doesn’t inherently mean it’s a bad idea.
anonu 4y ago
You can also lose face by doing what article suggests, which is "quitting". investors want a return on their money. They believe in your idea and management can make it happen. If management is no longer on board, what's to prevent investors from finding new management? Of course, easier said than done and depends on company stage. The downside (some risk capital) is small for an investor compared to the upside they're looking for, or that you're promising.
fourseventy 4y ago
pretty dumb article in my opinion. Part of being a good entrepreneur is struggling through hard times and figuring out a way to survive and make shit work when things aren't going well. If you follow this articles advice and quit at the first sign of trouble you won't get very far.
nickstinemates 4y ago
> Founders often want to “reward” their early investors and find salvage value while investors see major pivots and restructurings as leaving them with free “option value.” I think more human, personal elements are probably at play before this conclusion. Moreover, I think this mentality the OP is suggesting is good is actually wrong and actively harmful. > For almost all of them, it won’t be worth it. When things get really messy for seed companies, it’s almost always already a lost cause. The "almost" in this sentence is the actual key. How do you know? By not doing everything you can to find out you run the risk of the opposite reputation: Gives up easily, not willing to put in the work, fair weather founder, etc.
gweinberg 4y ago
I don't think the metaphor works well here. The argument that the ship of Theseus is the same is because even though each component has been replaced, it has been replaced by something pretty much indistinguishable from the original. One plank or rope or sail is much like another. I don't think anyone would claim it's still the ship of Theseus if you took all the wood and build something else out of it that wasn't even a ship anymore. But in any case I don't see how invoking the metaphor in any way supports the op's argument.
StriverGuy 4y ago
This was written by a VC who has no track record as an operator or founder. The only consistent advice I have ever gotten from the most financially successful people I know (many worth >$100MM) has been to never give up. Some of them took decades to get to even moderate success. The last decade has been an illusion of how quickly you can get rich starting a company. It can take years to see payoff and it is not always obvious.
- zemvpferreira 4y ago
  Well, yes, but let's bear in mind that there's a big confirmation bias there. Were these hundredaires more or less willing to give up than your ordinary founder who ends up with nothing after a few years to a decade at the wheel of a zombie company? Have they never given up on anything at all? Extraordinary people can fail and regular people can make a lot of dough. I've met with a few billionaires myself and I have to say I didn't find them to be a different class of human. Just luckyer, from good families and with a very good sense of timing. Obviously very good at what they do. But fundamentally not that different from you and I.
  - StriverGuy 4y ago
    I am not by any means calling it an absolute. But the data points tilt in favor of working through the pain and difficulties instead of throwing in the towel at the slightest speed bump.
    - zemvpferreira 4y ago
      Consider another point of view then: how many people struck it big on their second, third, fourth startup? Off the top of my head Uber was Travis' third startup. Does that make him a quitter or a perseverer? At my age I known plenty of tech entrepreneurs who've been at it for 10 years with no big hits. Statistically some of them will eventually make it. I doubt I'll be able to say sincerely they were the ones with more grit. But I'm sure they themselves will say it for me :)
- ZephyrBlu 4y ago
lmeyerov 4y ago
We decided to persevere through hard times by mostly annually checking 'is tech X / market X / milestone X being reached?', and then ahead of time updating the same 'in 1 year, will...'. Beliefs got validated, we went from default dead to default alive, and now growing & hiring without really caring about the frozen capital markets beyond how to help our customers through their side of it. Especially in something like category creation and deep tech, this can be a long marathon. But it also comes down to personal goals. If I was in it for the $, we would have been Google employees years ago and many m&a offers earlier. Shutting down can be the right move, so depending on the goals, different questions to ask.
cheerioty 4y ago
This is the worst advice I've seen trending on HN for a while. Speaking as an angel investor, as well as a startup founder myself. In fact, I'd feel quite offended when people offer me the money back. Luckily it didn't happen to me yet! I've seen dozen of early startups that went through a multitude of hard times (most of the time at the "finding product-market fit stage"), but pretty much all of those who kept going found mild to large success eventually.
woevdbz 4y ago
I don't know that that's valid advice. I know at least one friend whose startup was founded on one premise, which failed quickly, and left the team with enough runway to pivot to an eventually successful, and completely different, business.
colordrops 4y ago
I've got 1/3 stake in a company I left over ten years ago. The co-founder still hasn't given up, even though the company still hasn't turned a profit. I think he might be from a wealthy family and is just keeping it going to feel good about himself. Or he's a member of a three letter agency and using the company for intelligence gathering (it's based in a country at odds with the US). Very strange.
nc 4y ago
This has to be the worst advice I've seen on HN since 2008. It assumes if idea #1 doesn't work out quitting is the best way to go. The reality is once you have even a small team of co-founders or a slightly larger one together you have a group of people who have _hopefully_ learned to work with each other well and can move unencumbered to explore and test a variety of ideas, develop insights and ultimately increase their odds of success. Sure, it's not guaranteed to work, but it's probably better than the next best alternative. And oh, good luck just shutting down and re-rolling into a new company with investors and employees.
- iLoveOncall 4y ago
  I think your reality is very far from the actual reality. What I have witnessed with every single startup where I personally knew the founders was that the ideas were bad, the people were bad and the way of working was bad.
  - nc 4y ago
    I'm assuming basic competence in other areas, product/eng/sales/design etc. if you don't have that AND you don't have a clear idea/insight, then certainly it will be hard to succeed.
lazyant 4y ago
Book is a nice read, have some good advice but it's so unrealistic. One example: somebody finds out about event-driven architecture and in a weekend (or a week?) they successfully refactor a complex system with multiple disparate components that now can produce the reports or whatever they needed, I was shaking my head.

137 points by imartin2k 4y ago

For those who (like me) didn't get the reference, the "Ship of Theseus" is a thought problem about whether, if every part of the ship has individually been replaced, it remains the Ship of Theseus. https://en.wikipedia.org/wiki/Ship_of_Theseus https://en.wikipedia.org/wiki/Ship_of_Theseus

jackweirdy 4y ago
Is the ship of Theseus a single thought problem, or is it a different thought problem than when it was first thunk since all the present thinkers are different?
- idoh 4y ago
  That's a funny joke. It does make me think about concepts and organizations and how they can drift. I don't think the Ship of Theseus has drifted much, but I think it totally applies to organizations and who is a member, e.g. people who supported the French Revolution / a school board / people who identify as liberal or conservative, etc.
- Dylan16807 4y ago
  I know you're being flippant, but I don't know if you mean it, so I'll answer anyway: It's the same thought problem, because thought problems don't have to be embodied in anyone and it hasn't significantly changed. Also it's not the same actual thoughts across people, and basically never was. So there's nothing in here that's been slowly replaced piece by piece. The paradox does not apply to itself.
yakshaving_jgt 4y ago
Alternatively, Trigger's Broom. https://www.youtube.com/watch?v=LAh8HryVaeY https://www.youtube.com/watch?v=LAh8HryVaeY
- cryptonector 4y ago
  Or Lincoln's ax.
otikik 4y ago
One of my favorite ones. It comes to "identity". What does it mean to "be" (or not to be)?

habitue 4y ago

What about the classic story of the AirBnB founders pivoting from selling cereal? It seems like the metric for whether you decide to pivot or shut down depends on how many rounds you've done and how many employees you have. Early on, couple of founders & handful of employees: maybe do whatever pivots you can to survive. If you're a big boat and pivoting will require firing 80% your staff and starting an entirely different product, maybe consider just shutting down. (If you've got solid revenue but are just unprofitable, none of this probably applies, you should try whatever you can to save the revenue stream)

newbieuser 4y ago
airbnb is a business model that has proven to be a great idea at one point. but I wonder if this is valid for every business idea? In other words, can every business model that has been followed for years be successful?
fragmede 4y ago
But selling repackaged cereal in cutesy boxes was never Airbnb’s long term plan. Can it be called a pivot at that point?
- pfarrell 4y ago
  No it wasn’t Airbnb’s main line so I don’t consider it a pivot. I always thought it was a good lesson in being scrappy. They needed some cash, had a good random idea and did it as a side project to raise some money. In the end it became a great story of chutzpah too. Similar to how the band Vulfpeck found a loophole in Spotify’s terms and got a tour funded by publishing a silent album and getting their fan base to stream it at work.
- lawl 4y ago
  I wouldnt consider it a pivot in that case. Some business plans feel like an onion, there's always a layer more to it.

tschellenbach 4y ago

My first startup went through 2 majors pivots and eventually did quite well. The most valuable bit though was the experience. Second startup is in great shape thanks to that experience. I think many founders give up too early. You wont learn if you don't go through some difficult experiences.

bombcar 4y ago
The pivot can be key - especially if you've built a team that can execute, identifying early that your plan won't work and pivoting to something else can help. And in the worst case, you've learned more.
diob 4y ago
Keep in mind survivorship bias though. There are probably loads who pivot multiple times yet still end in failure.
- harpiaharpyja 4y ago
  It's tricky though, you often can't tell if you are in the survivor set or not until after all those attempts at perseverance. Its easy to assume that after N failures the company is not in the survivor set, but you can never actually know. So without perseverance, no one would be a survivor.
  - yrechtman 4y ago
    OP here. I think i mixed the message too much by putting pivots in the same category as founder transitions and down-rounds. Pivots are fine. But when you're basically just starting over on a completely new business with less money and a demoralized team, your likelihood of success is significantly impaired. Successful pivots need to carry ~something~ over of value
    - ncmncm 4y ago
      Yes. Letting them start over on something completely different is indulging sunk-cost fallacy. People were hired on the strength of being able to build X. If they are not who you would have picked to build Y, then getting them building Y anyway means you start out with a broken leg.

deleted 4y ago

[deleted]

RcouF1uZ4gsC 4y ago

On the other hand, Microsoft was just a BASIC vendor, Amazon was a bookseller, Netflix was mail oder DVD company. Sometimes if you have a really good team/organization it makes sense to pivot based on the market.

Hasu 4y ago
Microsoft's BASIC evolved into Visual Basic and still exists as the .NET platform. Amazon still sells books. Netflix still operates their mail order DVD company. All three do a bunch of other things now, but those products allowed the companies to grow and expand. I don't think expanding to other verticals is the same thing as a pivot, a pivot (imo) is when you entirely change your business strategy and product because the thing you were doing wasn't working. If you expand the definition of a pivot to any change in business strategy, then every company pivots all the time, and the term loses its meaning.
- deleted 4y ago
  [deleted]
- 015a 4y ago
  Yeah, and also; Amazon knew (or, at least, Bezos says he knew) from Day 1 that books were only the beginning. They started with books because they're an extremely broad category (hard to stock one Barns & Noble full of every book), easy to ship, and they have a practically unlimited shelf life (versus clothes/technology, which experiences seasonal trends, or even food; all of which Amazon now does). Big difference between "we think this is The Business, ope its not lets pivot" and "we think this is a good place to Start the Business and grow out of".
idoh 4y ago
Amazon always had ambitions to go beyond books, that's not a pivot.
- hinkley 4y ago
  But cloud computing?

krallja 4y ago

This is the model of Noubar Afeyan’s Flagship Pioneering: place tons of little bets, give them enough money to falsify the hypothesis. Don’t even name the company yet. It’s just an experiment. If it won’t work, kill it and move to the next one. If it does work, call it Moderna and sell a billion mRNA COVID vaccines.

cryptica 4y ago

It is going to work. I can feel it in my gut. I just need to keep myself and a few of generations of my offspring working on it for 150 years or so. Easy peasy.

lakomen 4y ago

That is very bad advice. If I did shut evrything down once I hit some hard opposition, I'd never finish anything. The better advice is, try, fail, try again util you succeed. Success is overcoming obstacles.

alx__ 4y ago
I think the key part of that idea is learning from the failures. Analysis and objective opinions on what caused the failure

memish 4y ago

On the other hand, that advice would have killed off Tesla and SpaceX at least 15 years ago.

ncmncm 4y ago
We can dream.
- dvt 4y ago
  What's up with the weird Elon hate recently? I don't care for the guy one way or another, but it's just bizarre. Plus, I have friends that worked for both Tesla and SpaceX and from what I hear, apart from being big and corporate-y, it's a pretty awesome place to be at.
  - christkv 4y ago
    He’s of the wrong tribe now it seems
    - ncmncm 4y ago
      No.
  - memish 4y ago
    He challenged the narrative and now he's a sworn enemy of the establishment.
    - ncmncm 4y ago
    - drewrv 4y ago
      The stuff he’s criticized for doesn’t “challenge” any narrative. It’s all self inflicted like lying about FSD or calling someone a “pedo”. And what do you consider “the establishment” to be exactly?
  - 4y ago

e-_pusher 4y ago

As always, all advice is wrong. While pivots are difficult to execute, many successful products came out of pivots like PowerPoint : https://en.wikipedia.org/wiki/Forethought,_Inc https://en.wikipedia.org/wiki/Forethought,_Inc.

TameAntelope 4y ago

What's the difference between a pivot and founding a new company? Sometimes your company has some baggage (messy cap table, bad hires, a down round, etc), and pivoting brings that baggage along. On the other hand, forming an entirely new company takes time and effort that may not be necessary. What do fundraising entities think when they see a company fold/exit somehow in a way that keeps the founder free, and the founder immediately found a "similar" company solving an "only" marginally different problem?

analog31 4y ago

Do investors have any evidence based reason to think a company has a better chance the second or third try, or a worse chance for that matter? Does past performance matter?

cryptonector 4y ago
So, I would think that startups do have a better chance on first and second pivot. After all, by the time it's time to pivot, the startup will have more staff than when it started, the social relationships will be established, and the staff's skills understood. It's a huge advantage compared to the day the startup is founded. > Does past performance matter? If a startup is pivoting, that means that "past performance" is negative. Does it say anything about future performance? Maybe it says "they'll fail and fail and fail again", or maybe it says "they've learned some lessons and now are staffed appropriately for a pivot". Investors have to put time in to understand what they might be investing in.

ncmncm 4y ago

Yes: e.g., Energy Vault (NRGV, $2B+) absolutely cannot work, and should be shut down immediately. Maybe give back whatever of the pigeons^Winvestors' money is left? Somebody should sue the founders for fraud. The crane thing was actively stupid, and very obviously could not ever have worked. An investor who bothered to consult literally any mechanical engineer would have run a mile. Lots did, of course. But somebody bade the thing up. The current "condominium for concrete blocks" scheme could probably be made to sort of work, for a while, until it breaks, but only at 100x the price of the storage that utilities will actually buy, instead, because they are not all complete idiots, and anyway have engineers on staff. I expect NRGV to pivot to orbital beamed solar power, next, or orbital mirrors to light up your solar farm at night. Anything that would take a long time to prove can't work would meet their needs.

brazzy 4y ago
Can you give a quick rundown why "the crane thing" could not ever have worked, and what exactly it was, separate from the "condominium for concrete blocks", which seems to be what is described in the Wikipedia article, but also uses cranes? As a non-mechanical engineer, it's not obvious to me.
- flaviut 4y ago
  Compare it to water energy storage. Water is 1kg/L. Concrete is 2.4kg/L. Therefore, the volume of concrete lifted is 40% the volume of water you would need to store the same amount of energy. Here's the biggest water energy storage facility in the US: https://www.google.com/maps/place/Dominion+Bath+County+Pumped+Storage/@38.2077068,-79.8056835,15.29z/data=!4m5!3m4!1s0x884b61d899351679:0x7ad630ea3bb1e14f!8m2!3d38.2089249!4d-79.8000836 https://www.google.com/maps/place/Dominion+Bath+County+Pumpe... Cost of the water for that facility? $0/L. Equivalent cost for concrete? $0.15/L (https://www.google.com/search?q=concrete%20cost https://www.google.com/search?q=concrete%20cost) That facility has 14GL of water. Replacing that water with concrete, you get $2.1 billion dollars. Which, ya know, actually compares favorably with the $4 billion (2022 $) that the pumped hydro facility costs. But then you have to remember that the pumped storage facility has like a half-dozen or dozen pumps, and that probably made up a big fraction of the cost. The equivalent lifting block thing would have... like thousands or tens of thousands of the motor/generator devices. I can't imagine the cost.

icu 4y ago

Aren't investors really investing in the team talent to find pmf? In this case, is it practical to advise them to quit? If there's blood in the streets, it's just time to be a vampire.

nlh 4y ago

A great quote sticks in my mind, shared with me by a founder who was going through hard times with his startup. The company was going through a bad spot, and one of his investors suggested just giving up and returning the existing capital to the investors. An advisor then said: "It's not their money anymore. Don't you dare give up." He didn't, he persevered, and the company had a fine outcome years later. I would not blindly follow OP's advice.

Ensorceled 4y ago
> They shouldn’t go through down-rounds, cap table restructurings, multiple major pivots, or team transitions. After all that, is it even the same company? No. They should just shut down and start over. The article is talking about pivots not a lack perseverance ...
- deleted 4y ago
  [deleted]
pram 4y ago
And that founders name? J. Robert Oppenheimer!
user3939382 4y ago
I burnt years of my life following advice like this when I was young and didn’t know better. If your formula is sufficiently wrong, which is the rule not the exception, you can’t make up for it with perseverance. There’s a selection bias in these stories you hear. Stories about people who gave it their all and failed aren’t popular.
- anonymouse008 4y ago
  What would you do differently? How do you know now that you were wasting your time? These moments make you more powerful than ever to be able to articulate why those precious (auto corrected but worked) times were not the myths you heard.

lostgame 4y ago

Simply watching ‘Dragon’s Den’ will reveal how ludicrously passionate people are about some of the worst ideas. I don’t really agree with the article, though. If it’s not achieving the results you want, it doesn’t inherently mean it’s a bad idea.

anonu 4y ago

You can also lose face by doing what article suggests, which is "quitting". investors want a return on their money. They believe in your idea and management can make it happen. If management is no longer on board, what's to prevent investors from finding new management? Of course, easier said than done and depends on company stage. The downside (some risk capital) is small for an investor compared to the upside they're looking for, or that you're promising.

fourseventy 4y ago

pretty dumb article in my opinion. Part of being a good entrepreneur is struggling through hard times and figuring out a way to survive and make shit work when things aren't going well. If you follow this articles advice and quit at the first sign of trouble you won't get very far.

nickstinemates 4y ago

> Founders often want to “reward” their early investors and find salvage value while investors see major pivots and restructurings as leaving them with free “option value.” I think more human, personal elements are probably at play before this conclusion. Moreover, I think this mentality the OP is suggesting is good is actually wrong and actively harmful. > For almost all of them, it won’t be worth it. When things get really messy for seed companies, it’s almost always already a lost cause. The "almost" in this sentence is the actual key. How do you know? By not doing everything you can to find out you run the risk of the opposite reputation: Gives up easily, not willing to put in the work, fair weather founder, etc.

gweinberg 4y ago

I don't think the metaphor works well here. The argument that the ship of Theseus is the same is because even though each component has been replaced, it has been replaced by something pretty much indistinguishable from the original. One plank or rope or sail is much like another. I don't think anyone would claim it's still the ship of Theseus if you took all the wood and build something else out of it that wasn't even a ship anymore. But in any case I don't see how invoking the metaphor in any way supports the op's argument.

StriverGuy 4y ago

This was written by a VC who has no track record as an operator or founder. The only consistent advice I have ever gotten from the most financially successful people I know (many worth >$100MM) has been to never give up. Some of them took decades to get to even moderate success. The last decade has been an illusion of how quickly you can get rich starting a company. It can take years to see payoff and it is not always obvious.

zemvpferreira 4y ago
Well, yes, but let's bear in mind that there's a big confirmation bias there. Were these hundredaires more or less willing to give up than your ordinary founder who ends up with nothing after a few years to a decade at the wheel of a zombie company? Have they never given up on anything at all? Extraordinary people can fail and regular people can make a lot of dough. I've met with a few billionaires myself and I have to say I didn't find them to be a different class of human. Just luckyer, from good families and with a very good sense of timing. Obviously very good at what they do. But fundamentally not that different from you and I.
- StriverGuy 4y ago
  I am not by any means calling it an absolute. But the data points tilt in favor of working through the pain and difficulties instead of throwing in the towel at the slightest speed bump.
  - zemvpferreira 4y ago
    Consider another point of view then: how many people struck it big on their second, third, fourth startup? Off the top of my head Uber was Travis' third startup. Does that make him a quitter or a perseverer? At my age I known plenty of tech entrepreneurs who've been at it for 10 years with no big hits. Statistically some of them will eventually make it. I doubt I'll be able to say sincerely they were the ones with more grit. But I'm sure they themselves will say it for me :)
ZephyrBlu 4y ago

lmeyerov 4y ago

We decided to persevere through hard times by mostly annually checking 'is tech X / market X / milestone X being reached?', and then ahead of time updating the same 'in 1 year, will...'. Beliefs got validated, we went from default dead to default alive, and now growing & hiring without really caring about the frozen capital markets beyond how to help our customers through their side of it. Especially in something like category creation and deep tech, this can be a long marathon. But it also comes down to personal goals. If I was in it for the $, we would have been Google employees years ago and many m&a offers earlier. Shutting down can be the right move, so depending on the goals, different questions to ask.

cheerioty 4y ago

This is the worst advice I've seen trending on HN for a while. Speaking as an angel investor, as well as a startup founder myself. In fact, I'd feel quite offended when people offer me the money back. Luckily it didn't happen to me yet! I've seen dozen of early startups that went through a multitude of hard times (most of the time at the "finding product-market fit stage"), but pretty much all of those who kept going found mild to large success eventually.

woevdbz 4y ago

I don't know that that's valid advice. I know at least one friend whose startup was founded on one premise, which failed quickly, and left the team with enough runway to pivot to an eventually successful, and completely different, business.

colordrops 4y ago

I've got 1/3 stake in a company I left over ten years ago. The co-founder still hasn't given up, even though the company still hasn't turned a profit. I think he might be from a wealthy family and is just keeping it going to feel good about himself. Or he's a member of a three letter agency and using the company for intelligence gathering (it's based in a country at odds with the US). Very strange.

nc 4y ago

This has to be the worst advice I've seen on HN since 2008. It assumes if idea #1 doesn't work out quitting is the best way to go. The reality is once you have even a small team of co-founders or a slightly larger one together you have a group of people who have _hopefully_ learned to work with each other well and can move unencumbered to explore and test a variety of ideas, develop insights and ultimately increase their odds of success. Sure, it's not guaranteed to work, but it's probably better than the next best alternative. And oh, good luck just shutting down and re-rolling into a new company with investors and employees.

iLoveOncall 4y ago
I think your reality is very far from the actual reality. What I have witnessed with every single startup where I personally knew the founders was that the ideas were bad, the people were bad and the way of working was bad.
- nc 4y ago
  I'm assuming basic competence in other areas, product/eng/sales/design etc. if you don't have that AND you don't have a clear idea/insight, then certainly it will be hard to succeed.

lazyant 4y ago

Book is a nice read, have some good advice but it's so unrealistic. One example: somebody finds out about event-driven architecture and in a weekend (or a week?) they successfully refactor a complex system with multiple disparate components that now can produce the reports or whatever they needed, I was shaking my head.