My Business is about to fold and I am sad

Miscellaneous and Personal Stuff I Must Share
1

(Long and full of whine!)
Two and half years ago I joined a small start-up. I poured my heart and soul into the development and we have created a product that I am quite proud of.

But we were always underfunded and even though the product is done, we cannot take it to market. We are out of money, we’ve exhausted all our options, all partnerships have fallen through, all attempts at grants, loans and every other option that I can think of has been exhausted.

And so now it is over.

The truth is, I probably should have left long ago. I’ve know for at least half a year. We had the domain expertise, someone who knew what to build. We had the technical expertise, someone to build it. But we never had the business expertise. I’m the tech guy, but to quote a non-biased observer, I have had to drag these guys kicking and screaming into business. They never saw the importance of business plans and routes to market and - well, all the things that the business guys should know and do.

For at least 8 months I’ve been telling them to get the business/marketing plan done - no business can do without it and no one will invest or partner with a company that hasn’t done one. A business should start with a business plan, and they always promised that they would get to it “soon.” I was naive enough to accept that it would get done.

As a software developer I just don’t have the market background to do it myself. I asked, explained, begged, demanded - it never got done. It got bad enough that I tried to get an outsider to do a business plan for us. Finally, I bought books and software and did one myself. It isn’t great, but it is better than having none. But there are great gaps in it - I have some background in this particular market, but I just don’t know that part of business. I’m the developer, I expected the business people to be able to do this. I was wrong. Shame on me for not vetting them properly. I’ve given my partners my business and marketing plans and asked them to fill in the gaps. It has been six weeks and other telling me that they would rewrite it to make it “more professional” they’ve done nothing. (Not even the rewrite, let alone fill in the gaps.)

Yesterday during a conference call one partner admitted that we had missed a deadline for getting a development grant because the grant wanted all the things that Khadaji has been asking for - business plans, routes to market, etc. I refrained from saying I told you so. There is no ROI in that. (But it took some self-discipline!)

He said we were guilty of doing what all tech-geeks do, put the cart before the horse; go forward without proper due-diligence in marketing. One of the others on the call, a non-partner spoke up: Hold on, Khadaji has been saying that we need those things for more than a year. The partner had the grace to admit that I have.

This isn’t life-threatening, I have irons in the fire and will likely get a job quickly.

But it has been the center of my life for two years and it is tough to watch it die.

I had a meeting with a man yesterday who has been wanting to invest and seems to honestly believe in the product. He has been in a successful business man for 30 years. He has been a boss in the past, a friend and a mentor. When he saw the demo (we give stinky demos - his words, not mine) and I watched him and I saw the “aha” moment where he got it, where he got what made us unique in our niche, it was exciting to see. He has a genuine interest in trying to take the product to market.

But here is the stumbling block. The last time we talked he looked me in the eye and said: OK, no bullshit, man-to-man, friend-to-friend, if you were me would you partner with these guys?

I couldn’t say, in all honesty, yes. The people I’m partnered with now are not the right people to go into business with. Hell, knowing what I know now, even though I’m proud of our product, I wouldn’t partner with these guys.

Yesterday’s meeting was a last-ditch effort to hammer out a path forward. He was the one to say that we should discuss options before I fold up shop, he didn’t meet with me out of courtesy. He told me that the product is too good to let die.

He did make an offer but I don’t think it is a path forward. The partners know we are out of money, but will not be willing to yield the percentage that he wants. They’ll let it die, I think, rather than lose a majority share.

In some ways this is better. I’m tired of being angry all the time. I know what needs to be done, but parts of it I just can’t do, and I haven’t been able to get others to do. At least now I can move on and stop trying to get milk from a cat.

But I’m still feeling sad.

2

I’m so sorry. I remember when you started this project, so excited.

3

Some people think that they can simply “wing” the business side. Or that business is just “common sense.” But as you learned the hard way, unfortunately, skill and expertise in business is much more important than technical expertise when it comes to success. It is an area that is grossly underappreciated. It is also the reason some CEOs are paid millions dollars (because they’re worth it).

Case in point: my uncle purchased a very small computer supply business in the early 1980s. Because he knew nothing about computers, everyone thought it would fail in no time. Within 6 years they were doing $500M in gross sales. He was able to do it because he was an expert in business and accounting. He also had a keen eye for talent, and hired excellent marketing and sales personnel. He eventually sold the company and became a very wealthy man, despite never really knowing much about computers.

4

Could you possibly license the technology to someone bigger? That way you wouldn’t necessarily have to see it die, but just be built/marketed/sold by someone else, while you get paid by them for the privilege.

5

We’ve exhausted those paths. Well, we have people *interested *- but after months of “interest” nothing moves forward, and doesn’t appear like it will.

6

I am so sorry. It is very hard to see a dream die. I’ve had plenty of experience in that, until now I just no longer dream.

I hope you are able to rebuild another dream, whatever it may be.

7

No, I knew that going in. What I learned the hard way is that it is harder to vet people than I knew. Our CEO had a successful business that he sold to a fortune 500 company in the mid-90s. His current business has been viable until about 3 years ago.

What I have learned since is: for his first business, he had an OK idea, but burned through 1million pounds of investment before finding people who could take it forward, and then he was a figure head. Even then, they would have probably folded before the sale if some of the managers hadn’t stepped up and funded the company, for the last 18 month before the sale.

His current business did OK until about 3 years ago, but he had basically one large customer that funded them - and he had kind of lucked into that customer. One of his partners (now passed on) had had the customer first and gone through a nervous breakdown. Before he was a partner, that man said he was going to just chuck it all and shut it down. Our CEO agreed to take the customer and take the partner on, thus inheriting a very big account. The customer was 80% of their business.

None of this came out while I was doing my vetting. The books looked good and the people I spoke to had nothing bad to say. (I recently growled at one of my contacts and asked him why he didn’t warn me. He said, what did you think I meant when I said that <insert CEOs name> is an odd duck? :smack: Odd duck? Man *that *was the warning?) Even now, I don’t know what I could have done to vet him better. I looked at the books for his current company and checked into his old company as best I could. On the surface, he looked like a business man who knows what he is doing. Even the down-turn in business the last 3 years is easily explainable - the economy has impacted everyone.

8

Sorry to read this, Khadaji. I remember the start of this business as well. Wish one of us could do something to help, but it sounds like the best move is to get out. Good wishes for your next adventure.

9

Sorry to hear about this not working out. On the other hand, now you know most of what an MBA can’t teach you about business. :wink:

People who were “successful” durng the 90’s bubble need to have more than that going for them.

10

Who owns the intellectual property rights? Is there a way they can be sold to someone who can avoid fucking up this idea, perhaps involving you and the other non-fuckups from this outfit? If this idea is really that good, it doesn’t need to die.

11

When we put the company together one of the first things the lawyers did was draw up a work-for-hire agreement, so that the IP would belong to the company.

I have had a different lawyer investigate possibilities - some things were promised to me that weren’t delivered - and he believes that I *might *be able to win them back in court - but he also said it would be costly and complicated by the fact that they are in the UK and I am here.

The Domain Expert and I have talked about it thoroughly, and we don’t think this is a worthwhile path at this time.

12

I also remember you talking about this some time back. And I remember one or more of your partners, even back then, was continually promising and not following through.

I’m really sorry this happened. IIRC there were plenty of warning signs though.

13

:slight_smile: Far too many. I knew in my head long ago I should leave.

It isn’t the same, but I figure this is similar to what it is like when a marriage fails. There comes a point when you know, but emotionally it is so hard to pull the trigger.

But I should have made the move long ago.

I have a friend who has had a failed startup and he says it has been agony watching, because it makes him relive his adventure.

14

So sorry - it must totally suck to have put so much of yourself into this only to have the effort fail. I hope your next endeavor will be a better experience!

15

My sympathies to you Khadaji. I know what it’s like to pour yourself into something and have it die on you. :frowning:

Best wishes for your next adventure.

16

I’m sincerely sorry for this. And you’re right that it’s like watching a marriage fall apart, particularly the type of marriage where both partners mean well, but one of them hasn’t the slightest idea of what needs to be done.

When I was doing marketing work for startups during the tech bubble, I was shocked at how many people had NO idea of what it takes to even start a business. We’d ask about a business plan and some of them even said, “Oh yeah, can you work up one for me?” (Hint, asking marketing people to develop your business plan is like asking your accountant to debug your code.)

It’s small consolation, I know, but at least getting your idea to the point where you had a product you could be proud of is an achievement in itself.

17

Sorry to read this. I know nothing about software, but I do know you’re a hell of a nice guy, and a bright one too. Best of luck whatever you do, Khadaji.

18

Damn. Sorry to hear it.

Everyone waits until it is too late. Human nature, I think.

19

I haven’t been through that exact same wringer, but close enough. I feel for you, I really do.

You said the IP belongs to the company. But the company is folding. That doesn’t mean the CEO gets the IP (unless he’s also the sole shareholder), nor does it mean the IP evaporates. There ought to be some way for you to get control of the IP, or at least steer where it ends up.

OTOH …

Just walk away and start over with something / someplace else. Although that sounds pretty defeatist, often the emotional cost isn’t worth the financial gain.

As we get deeper into these things, increasingly “Hail Mary” manuevers seem ever more plausible. Staking your next few months income & phsychological well being on some Hail Mary you’d have dismissed out of hand 2 years ago is probably not smart. Take your learnings & run.

20

I’m so sorry. I can’t imagine how you must be feeling, but know we are here for you to vent as much as you need to. Take care of yourself. You’re in my thoughts.