Your Days Are Numbered. Are You Prepared to Tell Your Crew?
A lot of once-young startups are soon going to be startdowns, as money gets sluiced off to newer, seemingly better business ideas. Failing sucks, but even in shutting a business down there are ways to do it right.
Executive director, Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship, Illinois Institute of Technology
The reckoning is coming. We're headed, I fear, for some difficult times for young companies that have scrambled for a year or two to keep their heads above water, but which are now reaching the point where the rubber better be hitting the road, or their ride may be over. They are going to need a lot more substance and a lot less "story" to keep their boats afloat. And, because of the way the funding guys play the game, the newest kids on the block (or the blockchain) are going to have an easier time raising a bunch of money than the ones who've been at it for a while and whose stories have lost a lot of heat and grown a lot of hair. Being yesterday's news or "just about to turn the corner" is almost as bad as being Yahoo! these days. No one is interested in profitless prosperity or forever chasing the horizon. "Almost" only counts in horseshoes and hand grenades.
I'm getting a sense that the "easy money" is starting to get harder - even the doctors are starting to ask to see the data. And that, as the time to reload those cobwebbed coffers rolls around again, it's going to be a lack of concrete progress, traction, real results and a path to profitability rather than lack of interest or funds that slams a lot of the doors and puts the final nails in the coffins. The money's always there; it's the pockets that change. There is plenty of Series A money to go around; but not if they think your business isn't serious.
So, as the boss, you're going to come to the point where you have to write the memo, where it's time to quit - turn off the lights and shut the doors - even though no one is certain where they're headed or what comes next. We've all been there, but, as always, Springsteen says it best: "you don't know where you're going, but you know you won't be back." Hopefully, you've prepared the path and won't be leaving everyone (or anyone) high and dry. There aren't a lot of skid marks when a startup shuts down, but there is a right way to do these things.
There's a right way to tell your team that their dream has turned to dust. They were there for you in so many ways and thanking them for their hard work and commitment is a great place to start the conversation. Be honest and make it clear that the last few months of a failing business are never fun. More like being pecked to death by ducks. A lot has been written about the value of failure, but some experiences don't make you tougher; they just wear you out. Yet the key takeaway, and what still makes even the wind-down process worthwhile, is that you hung in there and did it together. You had the opportunity to work with some great and talented people under the worst conditions and circumstances and see them continue to come through and deliver for the customers and clients that depended on them. Maybe not quite enough customers, though. That's a life lesson. Giving up is easy; gutting it out is hard.
I'd suggest that there are four other important messages that you might want to weave into your story. No pride of authorship here-- just some ideas to throw into the hopper. Ultimately, the story's gotta be your own or it won't be helpful to anyone.
First, you should caution everyone to be careful to extract from the whole process only the education and wisdom that's in it. And nothing more. Each deal, every business and all the many opportunities you'll be handed are unique and it's easy, but not smart, to try to generalize and carry your experience forward. But you'll discover that it's rare that the situation is the same or that the shoe fits twice. Like the cat that sits down on a hot stove, she won't do that again; but she'll also never sit on a cool stove either. You don't want to forfeit the future because of bumps in the past. It's up to each member of your team to be one of those people upon whom nothing is lost or wasted. They should take all of the lessons with them (good and bad) and use them to make something better and stronger the next time around.
Second, it's important to neither romanticize nor ceaselessly mourn the whole thing. Things were never as great or as horrible as they might seem in retrospect and in the selective retelling. Some poet once said: "when one door closes, another opens, but we often look so longingly and so regretfully upon the closed door that we do not see the one that has opened for us."
There's no question that your team has lived through some of the best and most exciting times of their young lives and that what comes next may never take them to those emotional heights again. You are only a virgin once. That doesn't mean that everything from now on will be a pale imitation of the past or a disappointment. We're all products of our pasts, but no one has to be a prisoner of it unless they're willing to settle for that. No one can step over you unless and until you lie down.
Third, nobody ever said that life was fair. After years of hard work and plenty of grief, things didn't work out exactly as you expected. No surprise there. They never do. Real life's like that. The fact is that neither life nor nature ever care if justice is done. Every action has both intended and unintended consequences. The intended consequences sometimes happen. The unintended consequences, whatever they may turn out to be, always happen. It turns out, as the old New York Yankees manager/philosopher Casey Stengel once said, "Baseball is the only place in life where a sacrifice is really appreciated." The most important thing is to always keep moving forward and to remember that, in tough times like these, there are really no winners--only survivors. The trick is to be sure to be one.
And one last thought as you all look forward to your next whatever. It really diminishes your soul when you do what you don't believe in. And even if the right song is playing, no one is going to tell you to get up and dance. It's all on you. Find something that you passionately care about, throw yourself into it with all your heart, and let the new chips fall where they may.