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What it should do is motivate founders to 1) read the 'sunk cost fallacy' article on Wikipedia, and 2) set clear lines well before 'mountain of personal debt' a

by fatbird 14y ago

What it should do is motivate founders to 1) read the 'sunk cost fallacy' article on Wikipedia, and 2) set clear lines well before 'mountain of personal debt' and 'ruined relationships', where you call it over. I walked away from a startup when it ran out of money. The founders were floating a proposal to guarantee a business loan with their houses. That, to me, was a bridge too far, an inability to recognize too much sacrifice in the making. Yes, there's such a thing as 'too much sacrifice'. Businesses are ultimately, as said in the linked article, run by the math, not the CEO. Overcoming the math with a foolhardy level of commitment is a mistake. It's gambling, not math. You'll learn the same lessons about commitment and failure before maxing out every credit card you can get your hands on.

Udo 14y ago
I agree, but I do think there is more to it than a sunk cost fallacy at work, though that part certainly plays a large role. In my case, the first year doing the startup was absolutely miserable, it was indescribably bad from an economical standpoint. Then, things picked up and for the first time we got the feeling that we could actually accomplish our ambitious plans. We identified personally with our "specialness", behind it all was the idea that somehow we had the right stuff. After a period of good profits and rapid expansion, several huge projects suddenly fell through. If we had never been borderline successful (albeit for a short while) I wouldn't have had this manic pipe dream of a possible recovery in the first place. That hubris was fatal. Of course, there is never just one reason for anything. Of course, there was a lot riding on making the startup work, not only in terms of financial commitments (that death spiral only appeared towards the end times) but also a large part of my personal reputation. Failing with a startup in rural Germany is simply different than, say, falling through an incubator in Silicon Valley. There is a lot of stigma involved and everyone knows your name. It's also a bitter experience when your own family and friends start seeing you personally as a disappointing failure. The deeper lesson here I think is to watch out for this type of creeping overcommitment as well as keep a watchful eye on what it actually means to fail. The level of personal commitment I mistakenly applied to my startup was simply toxic, to the point where I couldn't do my job anymore. While maybe trivial for some, it's a huge and complex lesson for people like me who are too quick to put too much behind their ideas.
- fatbird 14y ago
  I absolutely agree that there's a swirling mess of emotions and impulses around giving up and walking away and declaring it over. I was, rationally, absolutely in the clear that it was time to walk away from my own experience. But I still deal with a certain emotional residue around doubts about my decision and worries about how the others think of me.
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by fatbird 14y ago

Udo 14y ago

I agree, but I do think there is more to it than a sunk cost fallacy at work, though that part certainly plays a large role. In my case, the first year doing the startup was absolutely miserable, it was indescribably bad from an economical standpoint. Then, things picked up and for the first time we got the feeling that we could actually accomplish our ambitious plans. We identified personally with our "specialness", behind it all was the idea that somehow we had the right stuff. After a period of good profits and rapid expansion, several huge projects suddenly fell through. If we had never been borderline successful (albeit for a short while) I wouldn't have had this manic pipe dream of a possible recovery in the first place. That hubris was fatal. Of course, there is never just one reason for anything. Of course, there was a lot riding on making the startup work, not only in terms of financial commitments (that death spiral only appeared towards the end times) but also a large part of my personal reputation. Failing with a startup in rural Germany is simply different than, say, falling through an incubator in Silicon Valley. There is a lot of stigma involved and everyone knows your name. It's also a bitter experience when your own family and friends start seeing you personally as a disappointing failure. The deeper lesson here I think is to watch out for this type of creeping overcommitment as well as keep a watchful eye on what it actually means to fail. The level of personal commitment I mistakenly applied to my startup was simply toxic, to the point where I couldn't do my job anymore. While maybe trivial for some, it's a huge and complex lesson for people like me who are too quick to put too much behind their ideas.

fatbird 14y ago
I absolutely agree that there's a swirling mess of emotions and impulses around giving up and walking away and declaring it over. I was, rationally, absolutely in the clear that it was time to walk away from my own experience. But I still deal with a certain emotional residue around doubts about my decision and worries about how the others think of me.
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