Ask HN: Startup is Failing, Now What?

[dazeconfuse]

Throwaway account.

The startup I joined a few months ago is failing. I don't know what to do.

The writing is on the wall, I know it's coming. It's only a matter of how quickly our cash flow collapses. We are a small team in NYC. Ten people total. We've been cutting back more and more from the day I joined three months ago. It is becoming apparent that things weren't quite as good as I was lead to believe when I was hired.

Our CEO just came out of his office and then left. I think he has been crying. He keeps trying to reassure us that things are going to be ok, but people are losing faith.

Anyone have any insights on:

-Does it reflect poorly when I'm interviewing that I'm trying to jump ship? I wasn't a founder and don't want to be perceived as a quitter.

-Should I just ride it out?

-Any great blog posts already written on this subject?

Thanks.

[bap]

I've stuck it out to the very end a couple times. Once I was the last guy to lock the doors and walk away, after the CEO, after all the management senior to me. After the cleaning crew.

It really comes down to what you can afford. You've stated (obliquely) that your pay is being reduced. Can you afford to stick it out at the reduced pay? What is your opportunity cost for staying, do you think you can get a job at Square or some other too good to pass up opportunity?

Can you go a month without pay when shop closes up? Can you go three?

Some things to keep in mind: Sometimes when companies are in trouble they get bought by other companies. This doesn't mean your options will be worth anything but you will have gone through an acquisition which can be a valuable experience.

Sometimes they get shut down or liquidated: Still valuable experience (just once though, please.)

Sometimes lightning strikes and your startup comes roaring back to life. This one really depends on the team and your leadership, not to mention whether there was anything to begin with. If the team is broken and has lost hope then it's less likely anyone will find that inspiration that can change everything. If people still have fighting spirit you might have a chance.

I'm sure your CEO is wracking his brain trying to figure it out. His job is the worst job you can have right now. While you see a company failing, he sees himself failing. The simple fact is that most startups fail. They are experiments to begin with. Learn what you can.

The thing is, everyone who sticks around will have gone through something very difficult together, regardless of the outcome. Doing so makes those relationships valuable and long-lasting. A lot of "success" comes from solid relationships with people you can trust.

Tech startups are hiring like crazy right now. Definitely find out how much time is left. Time is the only thing in life you can't get more of but that doesn't mean you shouldn't choose to do something really hard once in a while. If the remaining runway is pretty short then it's unlikely you'll miss out on the rest of the current tech boom.

So, figure out how much time is left before the company ends then weigh the opportunity cost of staying versus where you might land if you go.

Oh and if someone offers you a job at something like Square that has the potential to change the course of your life through the amazing people you'll get to work with, the network you'll build and/or massive potential financial opportunity: TAKE THE JOB.

[dazeconfuse]

This is what I needed to hear. I need to balance the opportunity costs associated with my options.

I re-read this entire thing two or three times. Great stuff to consider. Thanks.

[doctorwho]

Did you take equity or a promise of equity? If so, flat out ask how things are REALLY going.

If you're just taking $ for hours and you like the work, stay for as long as they keep paying you but still ask if there are any problems. If they punt and don't answer or you don't believe they're being honest with you then start looking at your options for getting out of there.

You have to know that they'll drop you as soon as the cash runs out, so you owe them NOTHING.

[dazeconfuse]

I took the promise of equity, cash and benefits. Two of which are being reduced, one of which had dwindling value.

Good advice, thanks.

[manuscreationis]

Heres my personal tale of attempting to stick it out for as long as possible. It's quite a long read.

Not saying it'll be like this for you, but you need to decide when its time for you to call it quits, and not necessarily get trapped into thinking you can single handedly hold up a sinking ship

http://lookingbackaretrospective.posterous.com

[dazeconfuse]

Perfect. I'll definitely read through this.

[MattRogish]

No one wants to be the last person on a sinking ship. Yeah, being a rat stinks -- but it beats drowning. And I think most people will understand that.

On the flip side - if you're looking at other startups, they may view that as a potential negative. Things are always darkest before they get better and sometimes you need to stick with it until the end. Just once - to prove you have faith and loyalty; that you have the capability to see it through.

Only you can weigh the two choices but if you're in NYC tech scene there are a million great jobs; either choice and you'll be employed in no time.

Oh, and we're hiring!

[dazeconfuse]

Those are definitely the two options I'm weighing.

[brudgers]

You joined three months ago.

Things were already going downhill.

The company is not meeting it's explicit obligations in regards to your salary and benefits. It is unlikely to meet any promises to grow your equity either.

In my opinion, it was bait and switch. The signs were there for management when you were hired.

There is nothing wrong with leaving sooner rather than later. It's unlikely that you are forgoing a virtual 10,000 shares of Microsoft in 1984. Time to cut your losses.

Good luck.

[dazeconfuse]

This has been a reality check and forced me to look more objectively at my situation. Thanks for the advice.

[krausejj]

I'm sorry to hear this - it's certainly going to be a tough few weeks for all of you and especially the founder. If there's no way to pivot or salvage anything, I think interviewing is smart and any recruiter would understand why you're looking for a new job! Best of luck.

[dazeconfuse]

I'm hopeful people will be understanding.