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Well, I've never done either, but if you gave me a choice between having a startup fail and coming out of college with $100k in debt and no job prospects, I'd p

Well, I've never done either, but if you gave me a choice between having a startup fail and coming out of college with $100k in debt and no job prospects, I'd probably choose startup failure. It'd suck, but, assuming you did things the right way, you don't personally owe anybody a dollar. When you raise money you take on certain ethical obligations. I owe it to my investors to try my damnedest to make the company succeed. I owe it to them to try to give them a good return on their money. I do not owe it to them to reimburse them the money if I fail. At all. There's no debt of gratitude. If my startup dies and I go down swinging, then I'll know I gave it my best shot. That will suck, but they knew that was the risk going in. I won't lose sleep feeling like I ripped them off, just as I won't feel they ripped me off if I succeed and write them a check for millions of dollars. (I'd actually be quite happy to do so.) Student loans, on the other hand, leave you saddled with debt that's hard to get rid of even with bankruptcy. There are a lot of people graduating with law degrees right now who are screwed. I imagine startup failure is painful, but not going to ruin your standard of living for the next 10+ years. I don't know the particulars of this case. Maybe Jody's depression made him unable to live with mistakes he (or someone else on his team) made in good faith. Maybe he did something unethical and couldn't live with being found out. It's tragic either way.

tptacek 14y ago
Great comment. But you don't have an ethical obligation to be heroic in your startup. You are obligated to be honest when the investor makes their decision to back you, you're obliged not to be negligent in your execution, and you're obliged not to misuse their funds. But your kids, as it were, come first.
- bitcartel 14y ago
  Sure, that's a rational way to look at things, but human emotion is also part of the equation. It may be easy to walk away from professional fund managers, but friends and family and small angel investors who believed in you? Knowing that a social debt can never be repaid, sadly for some people, may be too heavy a burden to carry.
  - tptacek 14y ago
    If you took investment from friends and family under the auspices that it would probably get paid back, you lied to them. This is one reason you probably shouldn't ask for investments from friends & family. Professional investors know the score. Even the very most promising startups bear an unacceptable risk of failure in isolation. They make sense as investments only as a group. Even then, many (most?) VC funds lose money. They exist because foundations and pension funds want to put money into VC as an asset class, not because anybody is counting on returns.

tptacek 14y ago

Great comment. But you don't have an ethical obligation to be heroic in your startup. You are obligated to be honest when the investor makes their decision to back you, you're obliged not to be negligent in your execution, and you're obliged not to misuse their funds. But your kids, as it were, come first.

bitcartel 14y ago
Sure, that's a rational way to look at things, but human emotion is also part of the equation. It may be easy to walk away from professional fund managers, but friends and family and small angel investors who believed in you? Knowing that a social debt can never be repaid, sadly for some people, may be too heavy a burden to carry.
- tptacek 14y ago
  If you took investment from friends and family under the auspices that it would probably get paid back, you lied to them. This is one reason you probably shouldn't ask for investments from friends & family. Professional investors know the score. Even the very most promising startups bear an unacceptable risk of failure in isolation. They make sense as investments only as a group. Even then, many (most?) VC funds lose money. They exist because foundations and pension funds want to put money into VC as an asset class, not because anybody is counting on returns.