Ask HN: When do you know your startup has failed?

[superpi]

I'm currently going through a mini depression. We've gone without salary for the last 4 months, abandoned our business model to do pay for hire work in the hopes of trying to raise money to keep the lights on.

Honestly I feel like I'm going to be evicted from the house. My rent is already up, and as of now I have < $1 :).

My partner is fine actually, he has rich parents and doesn't really depend on the startup for income. Which actually gives my friends and family the illusion that we're both killing it.

We have almost 0 chance of raising more money, it's much harder to get money it seems if you're in a poor country.

So, if you've had a failed startup, how did you know? Did you run out of money and call it quits? If you succeeded, did you have a patch so rough that you were evicted?

I'm 25, I feel like I'm losing at life already. It was okay to be broke earlier, because it's expected. It's not anymore, when almost none of your peers are. Also, I'm not in a developed country, where being broke means living on ~$1k a month. I've been living on ~$200 a month.

Anyway, I just want any input from you guys. Like anything, I just wanted to get this off my chest. Not even sure I've really expressed what I wanted to express (English isn't my first language).

[jacquesm]

You're done with this one (because it seems you lack energy and conviction to continue), but: You haven't lost at life and you're not losing at life, you've gained something extremely valuable: experience.

Find a job, recover for a while (or if your partner is really wealthy kick back for a week or two and do absolutely nothing until you can't wait to get back to work, if you are from such different backgrounds it would not be outrageous to ask for a bit of support from that direction) and then try again, the start-up world does not care as much about your failures as it cares about your experience and you'll do much better the next time around, I guarantee it. Been there, done that, have several t-shirts, failure is absolutely ok and simply the expected outcome so don't sweat it. Best of luck and if I can help you or if you have concrete questions drop me a line, email in profile.

Apropos different backgrounds financially: that's a bad combination to start with, it means you will have a hard time keeping your respective goals aligned in the longer term.

If your partner does want to continue the business without you then that's fine, simply hold on to your portion of the business even if you don't work there any longer (your obligation to work stopped when you stopped receiving payment) or sell it to him (he can afford it after all...). And don't sell too cheap, keep in mind the company owes you at least several months back-pay!

[bsbechtel]

To piggy back off this, some are easily able to go out and find a job after a failed startup, but it strongly depends on your skill set and where you live. Programmers in the Bay Area - easy, founders outside the US - this could be much more difficult, I don't know. What I do know is that doing a job search in a tough market after a failed startup, with no money and bills due, can be even more draining and depressing than seeing something you were so passionate about fail.

I don't want to get you down, but want to encourage you to look for the option that is best for you (the OP suggested starting another startup, if you can as well). It may be hard right now, given your emotional state, but if you are the type of person that has always been able to find creative solutions to problems (or ways to do things better) no matter what you are working on, then have confidence in yourself that you can add value by doing this in whatever you decide to do next.

As far as what to do next then, start small. Look for the easiest/lowest risk way to make $1. If it's manual labor - mowing lawns, cleaning houses, whatever, then go do it. You'll rebuild your confidence in doing this, and if you believe you are a creative problem solver (most founders are), you will see new ways to do your work as you go about it. You will also figure out new ways to scale, and build a business. It won't be an easy path, but you will start to feel better about yourself almost immediately, and that's what's most important.

[superpi]

Thanks alot, from all the feedback, seems I'm better off applying for a job now, and recovering later. I've actually just sent a quick email to one of my contacts at a company I don't mind working for. Fingers crossed.

[JVillella]

"You haven't lost at life and you're not losing at life, you've gained something extremely valuable: experience."

Very well said!

[gearhart]

Is there anybody who wants your product? Do you have customers? Are they paying you? Is there cash that's just going straight out the door for hosting etc, or is there no cash at all?

I've run one startup that failed outright after 18 months with 10 grand still left in the bank, and I've run one that scraped through to become a success after 4~5 months of having nothing in the bank - I was sleeping on couches because I couldn't afford rent and my girlfriend bought me most of my meals - I got very close to packing it in. The difference between the two was that nobody wanted what we'd built the first time, the second time we were losing money, but people were paying us good money to use the product.

If somebody wants what you're selling - keep selling it, tell your partner that if he wants it to work he needs to put some cash in your pocket to keep your lights on and focus on the money, do whatever you need to do to get your customers to give you more. From where you are, the time for focusing on perfect product is over - you need to cash in what you've built. If you haven't built anything that anybody wants to pay for yet, forget about it, it's not going to happen this time - take a break, get an easy job, get some money and start again when you're ready. It'll be sooner than you think.

[superpi]

We had cash coming in, but it just stopped all at once. Like no one renewed their contract, so I guess that's a red light

[Gurrewe]

There is no difference between knowing when your startup fails compared to when anything else fails (eg. a relationship). It fails when you've lost hope for a future with it. If you don't believe that it's gonna work out, that's the time to stop doing it.

[galfarragem]

Great answer. Something fails when you loose belief in it. If she really believed in it she could ask for credit. The problem is that she doesn't believe in it anymore. Time to move on.

Imagine that you are swimming. In your hand you carry a heavy stone, you believe it is a diamond, but you can't be sure. Time passes, you are getting tired, you can't see land. What do you do?

Some people get so attached to their stuff that they sink with them. Be happy that you are not like this.

[eloff]

It's not quite that simple, because both in startups and relationships you can lose all hope for a future for a time, recover it at some point and be successful. I would say you've failed when that situation persists for too long - something completely subjective and dependent on your pain threshold.

[solve]

Good, but not good enough. Ask some successful founders if there was ever a time when they felt like all hope was lost. Very few will say never.

[JonoBB]

25 is young to feel like you are "losing at life". I was 35 when I started my first startup, completely bootstrapped. I ploughed all my savings (considerable amount) into the startup over a 5 year period, with lots of rollercoaster moments during that time.

From someone who previously earned a lot of money and now had a family to support, this was incredibly hard. I almost gave up a few times. Actually, I try give up once or twice by finding a job, but circumstances conspired to make me keep going.

7 years on, and things are much better now, and the business is actually doing quite well, and is a nice lifestyle business.

Seriously, 25 is young. You have loads of time to fail. Better to do it now, then when you have family obligations. That's when things are very different.

[brc]

Car rental firms won't even rent you a car until you turn 25, and that's because your brain has only just stopped developing.

Please get some perspective, and stop caring caring what others think. It's liberating to drop something that isn't working. It sounds like you might be in a culture where failure is shameful, but who cares. Hold your head high and say 'yeah, that didn't work out, learnt a lot, doing something new now'.

It's only a failure at that age if you didn't absorb any of the lessons. At least you didn't waste the time doing a useless college degree in a field nobody cares about.

[abcd_f]

> 25 is young

25 is more like the end of the childhood, really :)

[vidar]

As someone contemplating starting my own lifestyle business I would be interested in hearing more details.

[bkessler100]

I'm currently in your stage. Would love to hear more about your experience. How do I contact you?

[nhangen]

FWIW, I didn't achieve career or entrepreneurial success until my 30's.

[bane]

This startup has failed. Say it a few times. Take a deep breath. It's okay.

Now move on.

1) Get a regular job, take a year "off" from startups and just recover your sanity. It takes a long time to process the various emotions that come from this kind of intense failure. I've found a year is good for me. For some people it can be shorter, for others longer. Some people never get over it.

2) After that time, start working on new ideas.

3) If any of them look good, try again. If not, you at least have a job.

Money is the #1 problem in relationships, but what if you're the only one in the relationship? It's even worse, because then you're just fighting with yourself, and no matter the outcome, you'll lose.

Bonus for getting a new job? Almost nothing you'll encounter as an employee of an established business will come close to the stress of your startup failing. This will give you a different perspective about the workplace.

[allochthon]

> Almost nothing you'll encounter as an employee of an established business will come close to the stress of your startup failing.

This may be true. But in my own experience I find myself continually pushed towards startups because established companies that I've worked at have had unpleasant HR policies and hierarchical weirdnesses. (It's a little depressing when a startup sets out to mimic that stuff.)

[poldoga]

I've been there. CEO had rich parents and could do the startup indefinitely while I was seeing my peers do everything I've wanted to do while I was shit broke living on ~120USD in a third world country where nobody understood what I was doing ("You're smart why dont you just work at X. Look at Y's son, he's already working at Y"). Lost a lot. Lost money, opportunities, relationships, my youth. I quit, worked corporate (still working corporate) just to recover my sanity and finances and some semblance of "life". It's been one year and looking back it was the right decision. If you want to talk my email is in profile.

[monk_e_boy]

Hackernews tends to skew a persons perceptions about how hard it is to start and run a business. It's fickin ruthless and you have to be damn lucky. I feel very uncomfortable selling myself or my product to someone who can't really afford it, know damn well that I'm charging 10 times what it costs me.

But that's what you need to do to run a start up.

For the other 98% of people on this forum, a corporate job that pays the bills is all we're going to get.

[robertgraham]

Yea, your startup failed long ago. You are just throwing good money after bad.

Here's how a business model works: you try a business model. If it works, great. If it doesn't, move on and try the next business model. You are either growing, dieing, or the zombie of living death. If it's the last two, get out now.

If you are a skilled person, then you can always get another job elsewhere, especially now that you've got "startup experience" on your resume. Conversely, if you aren't skilled, then that's probably causing your startup's failure, and that's not going to change.

Being overly optimistic is great when starting a company. You have to believe, against all odds, that you are going to succeed. But optimism death AFTER starting up, hanging on hoping things will change when they won't.

Growing companies have a chance of success. Dieing companies really don't. Zombie companies are even worse. Get out.

[edw519]

We've gone without salary for the last 4 months

Been there, done that. 3 times. It sucks. But I never lost hope. Your startup may be on life support, but you most certainly are not.

Honestly I feel like I'm going to be evicted from the house. My rent is already up, and as of now I have < $1 :).

Talk to your landlord. You may be surprised at the response.

My partner is fine actually, he has rich parents and doesn't really depend on the startup for income. Which actually gives my friends and family the illusion that we're both killing it.

Forget what others think and focus on your own future.

We have almost 0 chance of raising more money, it's much harder to get money it seems if you're in a poor country.

I have NEVER raised money. Every investor I've ever met has said "no" to me. So I bootstrapped. And that has worked out very well. Forget about raising money and instead start thinking about earning money.

So, if you've had a failed startup, how did you know?*

When I was broke and no one was buying anything. 3 times. All 3 times I got a job, recovered financially, and when the time was right, tried again.

I'm 25, I feel like I'm losing at life already.

Fuck. That. Shit. You're not old enough to be "losing at life already". I didn't do my first startup until I was 32 (it failed). So you're already 7 years ahead of me and I'm doing just fine, thank you.

It was okay to be broke earlier, because it's expected.

Forget what's "expected". Just be yourself. Your own expectations are the only ones that matter.

... when almost none of your peers are.

DO NOT compare yourself to others. You can never win that game.

Anyway, I just want any input from you guys.

You have not failed. You have learned. There are 2 things you have that 99% of your peers probably don't: the contents of your brain and the contents of your hard drive. You have already accomplished alot and no one can ever take it away from you.

Get a job. When the time is right, do it again. It's a marathon, not a sprint. You'll be fine.

[superpi]

I really like this, thanks!

[tomashertus]

Signing this...

[idanb]

Cheers to that

[Swizec]

As someone whose startup failed failed way after it actually failed, this is the point at which a business fails: "We've gone without salary"

That's it. If a business cannot sustain itself, it has gone bankrupt. A bankrupt business is donesky.

But in my case it took being fired from the company I founded to face the facts. Not making salary is not cool. Not putting food on the table is even less cool.

Remember, you can't eat equity.

PS: I'm 27 now, the startup failed failed when I was ~23. It feels like a different lifetime. You will move on.

PPS: if you want to talk about stuff at length, email me -> [email protected] . Even a mini depression can suck :)

[nadaviv]

Many early stage startups can't afford to pay salaries prior to raising capital. When I started working at a full-time capacity on my current startup, I went through 6 months without pay.

"If a business cannot sustain itself, it has gone bankrupt" might work for some more traditional cash-flow businesses, but I don't think that it applies very well to startups.

[soup10]

Well, if you're living off your savings to work on your startup, then it's officially failed when you'd rather get a job than continue to burn through your personal savings.

[joedavison]

Yes, your startup failed. That's OK. 25 years old is not old. It's OK to lose all of your money, it is almost a rite of passage for most entrepreneurs. You are lucky it is happening to you in your 20's, and not your 30's or 40's.

You have lots of time ahead of you. You are not "losing at life". Just keep pushing forward, however you need to. You will not die or starve. If you have no money now, it can't get worse. That is the good news.

You have dug yourself into a hole and getting out will not happen overnight. Stop dreaming about a unicorn investor that will somehow save you. The chance of that happening is slim. Focus on practical steps you can take to improve your situation, one step at a time.

Winston Churchill had something to say about your situation:

"If you're going through hell, keep going."

[neals]

It fails when you want it to. Let te me tell you my situation:

Some of my projects have been getting a beating lately. One of my sales reps. just went missing. Just gone. For 4 weeks now. Together will a kinds of random stuff that makes me feel like this house of cards is coming apart. But I still believe in the product. We have clients and there are still ways to go.

I've put it all on hold for 3 months to do some contracting and cash-up, than it's back to trade shows and sales.

But I also think that having a startup is a luxery and (more and more) a marketing term that comes from the investent people. "Do a startup" and you can ask people to work 60 hour weeks. "Build me this product" and that same amount of work will cost you way more money and time.

I have been so blindly running my own products ("Startups") for 6 years, until 2 weeks ago I realized that contracting myself as a developer makes me 21k a month. I had no idea it was like that, I hadn't checked what all my newly gained knowledge has meant for my rates.

So what does it mean to you? If it is making you depressed, maybe don't do it? With SO MANY startups right now, it's very unlikely that you will make more money from it than from contracting. So are you in it because of your passion? Or to make money? Ask yourself these questions.

[kdamken]

21k month? That sounds crazy (and amazing) to me as new frontend dev. If you don't mind me asking, what kind of development are you doing and how many hours are you working a month to make that amount? Might help me decide what to learn next : )

[dented]

If you die from hunger you can't expect to succeed in the startup.

Don't count on being the next big miracle.

My best advice is to talk to your partner. They are suppose to be as close as a spouse if not more. You need to make sure that they understand your circumstance. This will help you make a better decision going forward.

What we decided was to take time off and make money and come back after we've fixed financials. We believe in our partnership but felt maybe we did not execute fast enough or the business model wasn't strong enough at the time.

You should remember that not all the ideas work and that you can always try again unless you're dead.

[sergiosgc]

Try to do a non emotional analysis first. An emotional analysis will make you quit at some point. Everyone has a few lows now and then; it only takes one of these to call it quits. Look at the numbers and prospects. Analyze this on the time frame of your needs. It looks, from your text, that you can hang in for six months at the most, and even then with some effort.

Look at the numbers. Is there money coming in? Are there sales prospects in the pipeline? When can the company free cash for your salary? Can the company cut some costs in order to free cash for your salary? The scenario, for a six month time-frame should be clear. Talk it out with your partner. Make sure he knows your predicament.

Then, and only then, look at it emotionally. Can you realistically make the effort? Assume there's a relevant chance it does not pan out. More so if the plans hang in undeveloped sales prospects. It's awfully different if you're about to close a couple of decent contracts than it is if you're just starting sales pitches.

Unfortunately, and any founder will tell you this, outside opinion is very unreliable. Hear from people that have founded companies. Everyone else has a different risk profile. I can't count the number of times I was questioned "why don't you take a corporate job? With your skill level, you'd be a demi-god.". Even other founders are biased. It's truly a personal decision, and must be taken as rationally as possible.

[superpi]

Wow! Thanks very much guys for all the advice. I actually posted this in the morning just before work, and just checkin on it now, I really just can't believe the amount of time you guys have spent trying to help me out. And this is all very useful. I'm going to get a job now and stabilise for a bit, before I try to start another venture.

Thanks again, I'm most grateful.

[blrgeek]

Have been in your boat. It's not so bad after it ends, your life does NOT end :).

I could get a job in a large company, at what I thought was an absurd salary, after I was done with my startups. At a time when I thought no one in their right minds would give me a job, given all the crap I'd done in my startups (and done no one thing for 3-4 years).

Are you in India? If you are please connect with me, and I will help you out.

[superpi]

Hi, I'm not in India, though I'd like to visit some time. Thanks for the generous offer

[Turukawa]

The worst is a zombie business; the ones that earn a bit, seem to be on the cusp of success, but also won't ever give you the clarity and just die.

Your business doesn't sound like a zombie, though. It is time to shut it down and move on.

I've been where you are a few times and I know the incredible paralysis that sets in when this decision needs to be made.

You're doing this so that you can do something else (even if you don't yet know what it is) and to be kind to yourself. No-one deserves that sort of punishment.

And, if it helps even a little, know that you can walk away and you can start again. The sun also rises.

[zupa-hu]

For me a startup needs 2 things at minimum: a product users want and a strategic advantage.

I assume you don't have at least one of these. If your users don't WANT what you offer, pivot or shut down. If your offering is commodity, pivot or shut down.

I assume you are depressed because you don't have a plan that offers a way out. Make this your job. Make it your friends job. If you can't figure it out, then your startup is dead, regardless of you admitting it or not.

Not taking action will make you even more depressed. You need progress. Whichever way, move.

[chrismarlow9]

The business failed. You did not. The knowledge you just gained can't be taught, and you'll see the signs much earlier next time. Chalk it up as a life lesson and move on. Take a break, give yourself time to really go over everything that happened and let the lessons learned really sink in, and then get back on the horse. Aim for stability (a set schedule, an hourly wage), but don't stay there, only use it as a landing pad when you fall hard in times like this (its easy to become content with mediocrity).

Best of luck to you.

[vladtaltos]

having this sort of income inequality between partners is a big problem. it changes how you look at the business. it seems to me you've already at a point where you have to find a job.

what I recommend is this: discuss the situation with your partner. you need to find investors - it is as simple as this. if you cannot find one, ask for your partner to invest in the company some money if you both still believe in your business model. it doesn't make sense to to forgo your salary when you don't have any money in the bank - what will you eat ? grass ? if you can't raise money or not willing to invest your own it means that your expectation for a viable business is gone. if that is the situation call it quits asap. it doesn't make sense to try to go another few months and lose more resources and acquire debt - find a job and try your hand again in future when you're financially more stable...

[eranation]

> I'm 25, I feel like I'm losing at life already

Don't, I'm 37 and I never had a successful startup, when I was 25 I didn't even know what I want in life. It seems to me people more and more seem to put milestones in their lives "if I don't get to be X by age Y then I have failed"

You are putting yourself to failure. compare yourself to yourself, don't compare yourself to black swans like the Zuckerbergs of this world, they are one in a billion. There are more talented and smart people who are great that didn't create a successful startup than there are people on facebook.

I would say you are in a crisis mode now, and for now your startup is done for, but this doesn't mean that once you get back on your feet financially you can't go back and revisit that idea.

If you post your contact details and tech stack I'm sure you could find some temporary gigs to keep you floating.

I never went into startups because I lacked that financial backbone when I was younger, and had a family later. But I'm happily employed and like my side projects. Going into a startup is a long term game, you are taking lower salaries so you can pay top talent more than you are paid yourself, and you don't want to burn all that seed money (if you are lucky to have any, or using your own savings).

It sounds to me like you need some real remote, US dollar rate work ASAP. If you have been living on a $200 a month, I'm sure that there are people here that would hire you in an hourly rate that would make you earn that in a day or so at last...

I would personally take a break from the startup, use this stage to get some freelance pipeline, get my pockets full of money (or get a remote fulltime job in a startup), save 6 salaries, and only then go back and trying a startup.

Startups have very low success rates, it's all about trying many things, MOST startups fail as you know. this is why you need some savings first.

If you don't have a place to sleep, and food to eat, then you CAN'T RUN A STARTUP

http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

[MrFoof]

>It seems to me people more and more seem to put milestones in their lives "if I don't get to be X by age Y then I have failed"

I agree that people tend to focus more on "when" and not "if".

I've always focused on doing something eventually... and then doing it far better than anyone else, especially those who rush into it and end up with something suboptimal. People always ask, "How did you do/get X?" Well, I was patient. Instead of spending effort/resources on tiny incremental changes, I just kept waiting until I could make the big thing happen, and do it right. Sometimes I have to wait 5 - 10 times as long, but I get what/where I want eventually.