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Ask HN: I think my startup is going to fail, what should I do?
31 points by startupguy73 on Sept 23, 2009 | hide | past | favorite | 30 comments
Dear Hacker News:

About six months ago, me and two of my friends (we work at the same company) decided to go and start a startup. Since we didn't have funding, we figured we'd keep our day jobs, build the website, get a few users, and then quit and work on the company full time. The initial plan was for me to do the programming/technical stuff, one of my friends to handle getting funding and the other to handle marketing/getting users.

I've built a pretty decent site (in my humble opinion), but I think my friends want to abandon the project. They've floated the idea (several times) of just scrapping all my current code and starting over, they don't propose new features anymore, they haven't gotten around to getting the paperwork to form the company since they said they would (in June) and they say now they might never do it, etc., etc.

I only put a few months of full-time equivalent work into the company, so it's not the end of the world if it fails, but this sort of thing seems to keep happening to me. When I was in college, I did some research with a professor and he never got around to helping me with the write-up and publishing. I wrote a long article for a magazine last year, sent it in to the editor, they said it was very nice and then ignored it. I did part an earlier web application four years ago, but my co-workers never launched it. How can I avoid this sort of failure?




1. Stop the car and ask them to get out.(Maybe compensate them for the journey so far.)

2. Get in the drivers seat.

3. Hit the accelerator as hard as you can.

4. If the ride is good, you might get more passengers to ride along.

5. Even if the ride is not good for sometime, you still might get the adventurous sort going in the same direction.

6. Whatever happens don't let go of the accelerator and keep moving ahead.

7. Most importantly, always remember to enjoy the journey - make stops, meet people, reflect on how far you have come. It is more important than your destination.


Ask them to sign over all rights for the company to you. Prepare to be busier then you've ever been. Launch. The worst case scenario could be that you get no users... if that happens, search out a new partner, it should be easier to find one with a prototype already built.

If the other worst case scenario happens and you get a lot of users, good problem to have! Find some more help at that time.

You are on the cusp of succeeding or failing. Nothing has been determined yet, and don't let your partners decision to do nothing stop you. Oh, and it sounds like they haven't done anything yet.

Next time make sure your partners are putting in as much effort as you are along the way so that you aren't the only one with flesh in the game and they along for the free-ride.


Thanks!

They definitely did put in a lot of work, which is why I'm surprised they're giving up now. Eg., they made a whole bunch of fabulously slick presentations for investors that must have taken dozens of hours each (none of them invested, but hey, that's startup life).


I've seen this as well but in a much later stage of running a company, a nearly done deal went south at the last possible moment and everybody got demoralized to the point where they wanted to quit. I ended up selling my house to buy everybody out, and it's been a pretty good company ever since.

Not everyone is made to be an entrepreneur you have to take your beatings and keep going, that is the only road to any kind of success unless you are a very lucky person.

I'd make a reasonable valuation of what you think the whole project is worth at this time, try to figure out fairly what their contribution is worth and then offer to buy them out if you can afford it, or, if you can't to take them on as silent partners and give them non-voting stock. The latter is a (nearly) surefire way to never get any investors on board though, you have to be aware of that.

Then, after that you go and work like the devil to make it happen.

If you can't afford it and/or you don't want to have them on board as deadwood I'd just walk away, and do something new.

About your 'black cloud' following you, this can happen simply as a series of coincidences, or it might have to do with the company you keep & pick.

That's very hard to comment on without knowing a whole lot more about the situations you were in, one thing is for sure though, if you want stuff to happen and to succeed then you'll simply have to shift over to the drivers seat, if you think you 'need others to succeed' you are not yet in the right mindset, you are seeing yourself as a victim or at the mercy of others. That needs to change for sure.


Maybe it's the repeated failures to get investors that did it. They might need to be reminded that the lack of investors is not necessarily a bad sign - audiences, unlike VCs, have nothing to lose by giving you guys a chance.


but this sort of thing seems to keep happening to me

Very respectfully, you strike me as the kind of person who is easily discouraged.

Let me tell you a story about discouragement (or the absence of). When I was in high school my parents told me the didn't have anything saved for me and I'd have to pay for college. I spent my entire junior and senior years applying for scholarships. There was one really big $20k scholarship in particular though that I thought I was a shoe-in for.

Well, the notification date passed and I hadn't heard anything. So I called and called, trying to find out what was going on. The obvious answer was someone else had won all of the 5 scholarships they awarded. But I wouldn't stop until I knew for sure. Finally, I found out that they had all been given out, but that 3 students had declined (they were school-specific). These 3 were going to go back into the budget for next year. I pleaded my case with one of the administrators, and within 24 hours, one of those awards was mine. $20k just like that. And there were 2 more just sitting there if anyone else would have done as I had.

When a magazine ignores your article, it's up to you to make it impossible to ignore.

Anyway, back to your question... ask your partners to hand over the company. If that doesn't work, buy them out. How much? Well, how long would it take you to start over, and how much is your time worth? (i.e. (time to recreate) * (value of your time) * (their ownership of the company) = buyout at this point, because you don't have any realistic valuation criteria beyond that)

It might be a good idea to start something new. And don't let things happen to you, make them happen.


Straighten out the situation with the rights, first. Establish who owns what, so that if your buddies decide it's not right for whatever reason, you still own the right to do things with it. If it's a joint contribution (eg you did the coding, but you all3 came up with the idea and your buddies each suggested things like site names and design elements), then work something out now.

Even if they are cool and 'nah, it's all your buddy' get it in writing. Don't ask them to put it in writing, say 'cool, I'll just write that up then'. (The only part you want them to actually write themselves is their signature agreeing to the terms specified by...you. This is something I wish I had realized earlier in life!).

Then launch. Or conduct a limited alpha with HN readers or whatever you need to do. Also, I do get the feeling you're letting these people (and others) hold you back a little bit. I feel where you're coming from, and I trust you have reasons for your disappointment, but you come across as a bit passive. If you're like me, you may have difficulty sounding out people's feelings, so you can't tell when someone is seriously interested or when they're just being polite to blow you off or get something for nothing. The only solution I've found for this is to be polite but assertive about asking follow-up questions. If someone vacillates and says 'well of course I do like it...maybe I could help you later' just let them know you'll keep exploring other options, eg 'Sure, I get that - I guess you won't mind if I take it across the street then, I need to move forward with this'. It's a terrible drag but that's how a lot of people are, if you hand them something on a plate they don't appreciate it and if you take it away they'll complain you didn't let them have a bite.


Great advice anigbrowl! I especially like the emphasis on GETTING IT IN WRITING.

Another point of anigbrowl's I'd like to emphasize: write the first draft yourself. Discuss transfer of IP from them to you, then write the doc yourself. Two reasons: 1) they don't sound like they'll get around to writing it. 2) You can anchor the agreement however you want it, and they will have to respond to edit.

I never have understood people who ask somebody else to write up the first draft of a contract / agreement. Yes, you will negotiate on points, but if you are the original author, everything is anchored where YOU want it to be.

Anchoring is a VERY powerful psychological tool.


How can I avoid this sort of failure?

The only way to avoid failure is to stop trying. Unfortunately that is the same way to avoid succeeding. I think you need to find less flaky people to work with.


Wow, this sounds remarkably similar to my situation except there is me and just one other friend and we've been doing it a couple months less than you.

I'm going to talk with my friend this weekend and get things sorted out. The worst case is that I will just launch the site as a minimalistic version and then work on a separate business idea by myself.

I think the main problem is that my friend is completely non-technical. I was relying on him to do the marketing.

As a follow up question, how do you separate duties between a technical founder and a non-technical founder in the first few months of a startup so that all people have equal amounts of work?

With my idea, I was prepared to invest more up-front time as I was solely developing the website with the expectation that my partner would get things going at the appropriate time.

I guess that is a mistake in hindsight.

This comment probably doesn't help you in any way but hopefully we can learn something for the next time.


Dude, you've been taken advantage of. You did all the hard work; while your friends may have brought the idea to the table, they're not invested the way you are. Your friends are the assholes who give "business guys" (like me) a bad name.

I can do a fabulously slick presentation in half an hour (I've charged people to make slick presentations for them (if you can't make your own docs, contact me - it's only $150 an hour :) ). You've done vastly more work than they have, trust me. You should let it go and let them fend for themselves. Hopefully, you've learned some sysadmin stuff you can apply at your next gig, but this has been a harsh learning experience.


>>How can I avoid this sort of failure?

It seems like all of these "failures" were related to your dependence on some other people. Once they gave up on you, you seemed to accept the effort as a "failure".

I have two suggestions 1. Perhaps pick your partners a little more carefully 2. Work on a venture that doesn't depend on other people ...or at least don't give up immediately after your partners give up. imo suggestion-2 is the way to go, but perhaps you should also consider why you have always been dependent on other people for your success plans.


Summarising, and adding my $0.02 ...

Since they want to abandon it, get them to agree in writing that they are walking away and leaving you everything. Make sure you write the agreement, and get all parties to sign it. If you can afford it, and if you think they deserve or will want it, offer them some money. If they accept money, get a receipt. I believe having money in exchange makes future disputes less likely. You made an offer, they accepted, they got money, you got the rights.

While you are doing this, get a few opinions from people who have never seen it before. People here on HN are usually pretty straight and pretty honest.

Target limited alpha launch (not just a couple of people dropping in) for two weeks from now. Target beta launch two weeks after that. Don't move those deadlines, just make sure you hit them. If you can bring them closer, do it.

Launch, and listen to the feedback.

A comment about the failures: Each one you mention, the failure is that you have not taken control. You are doing the work, but you are not driving things through. If you are ever going to succeed in these sorts of things you must see what needs to be done, and get it done.

Finally, you can contact me directly if you want. There are two ways. Firstly, find a real email address for me. It's not that hard, others have done it.

Alternatively, read this page:

http (colon) //www (dot) penzba.co.uk (slash) DHMW_Challenge.txt

I'd prefer not yet to have a direct link. On there you can find instructions on creating a public-key message for me which you can either post or, preferrably, put in your profile. It's probably secure enough for what you want.

If you want to do this but have trouble, reply to this comment.

On the other hand you can give up and walk away, but from what you say, you've already done most of the work. Be methodical, make a plan, then work through it.


I hate to be cynical, but most people are going to flake out. Many people overcommit themselves, or just say "yes" because they thought it was a good idea at the time. I've experienced this sort of flakiness - and done it myself more times than I can remember.

You sound like the kind of person who prefers the social bonding that co-founders provide, as I do too. However, sometimes you need to go it alone, because most people won't be able to connect the dots the way you do. In most of these situations, my motivation would peter out because there was no-one with which I could share the success. Eventually, I sucked it up and rode on without a co-founder, and now I'm having the time of my life.

Startups are difficult, especially by yourself. But the short-term pain is worth it.


It appears to me that you brought in 2 friends for the sake of bringing in 2 friends, not because you needed them.

One guy's job is to handle funding, of which he has yet to acquire any, and the other guy's is to handle marketing and getting users. This really sounds like the duties of one dedicate individual with a background in business and/or marketing - not sure what your friend's backgrounds are.

I've been in this situation before and it comes down to a simple decision: do you want them around any more?

If so, sit them down and tell them they need to start pulling their weight. Maybe they lack direction and need you to provide that for them (which is worrisome, since one of these guys is supposed to be fulfilling the CEO role at this point).

If you want them gone, draft up some paperwork stating that they are bowing out, they want nothing to do with the company, and you don't owe them anything for ever and ever amen.

Just reading your situation here, it sounds as if the latter is your best option. You are basically doing all of the work yourself it seems and dragging 2 friends along with you. Add another hour to your schedule each night for a week and you could complete all of the work they've done the past 8 months or hire people freelance to take care of some of that for you.


It looks to me that you have some kind of mental block over judging people or your too quick to trust. I used to have the same problem.

In American society its frowned upon to judge people but the truth is if you want to trust someone then you have to judge them by their actions.

Its usually the hardest to judge your friends because you've subconciously glossed over their flaws. If you look carefully at the way someone does things (and this can be anything) and how they behave then you'll get an idea of what he/she's capable off. You have to be careful so you dont mis-judge people but you do have to do it.

So dont be afraid of judging people. And always judge before you form a relationship with them.


It sounds like you constantly depend on other people too much. Have you thought of bootstrapping and just doing everything yourself?

My favorite quote of all time is "Only victims make excuses." I think you need to stop being a victim.


Your friends are flakes. Get as much ownership as you can (all, maybe, or perhaps just the code — it doesn't seem like there was a great deal of formality) and go it alone. They're not helping.


Comes down to a simple choice, Red. You gotta get busy living or get busy dying.

http://www.imdb.com/title/tt0111161/


> one of my friends to handle getting funding

Why do you need funding?


Can you tell us what the startup is called? Or at least what kind of work you guys do?


I don't want to do anything that might provoke a fight, and they might be reading this.


Why would it? You are not saying anything bad other than they are not interested in it anymore.


better question: after a few months of full-time equivalent work, why don't you have something you can launch? or is it not that type of company?


We could have launched it last month, but I don't think I could handle the workload myself in my spare time, and they want to keep delaying our launch until they think the site is perfect.


screw that, launch. launch it and control your workload by controlling your marketing plan, trying to keep the number of users in check with what you can handle. then polish it.


Seconding this. You're not going to have a perfect site specifically because you haven't launched. Without audience feedback, all you're doing is endlessly second-guessing yourselves - that sort of feedback exacerbates any existing groupthink behind the design, potentially causing it to be far less usable than it originally was.


Third, launch then get feedback, interate quickly. I was scared when I launched my startup, but you will realize it takes time to get users to try your service out. We were lucky to get techcrunched before launch which led to a bunch of signups for our beta. So we had about 2000 users on our list prior to launching.


This is false. You could certainly handle the workload. You may handle it poorly, but you can handle it. It will not kill you. It will not maim you. Perhaps you gain 10 lbs from overeating due to stress and your WoW rating goes down (or whatever you fill your time with). But the statement above is patently false.

I say this as someone who lies to himself like this sometimes, too. Any time you hear yourself saying the words "can't" and "need" you have to stop and realize that you're probably lying to yourself. You don't _need_ that feature. You _can_ survive being stressed out for 3 months.


Launch early and iterate often! Websites fit this model perfectly. Launching can be scary -- but what do you have to lose? Feedback from a partially working site is better than nothing!




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