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How do you know when to walk away (from your co.)?

Entrepreneurs pride themselves on pushing through and not backing down. But sometimes, folding things up is the right decision. Micah Baldwin, serial entrepreneur, just wrote an extremely honest and open post on the FD blog about this that is moving- Knowing When to Fold 'Em

I'm wondering if you've had a similar inflection point or seen others that have, how it was handled, a decision made, etc? Walking away from your "baby" is super difficult. How do you know when it's the right decision?

6 Replies

Sridhar Alla
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Sridhar Alla Entrepreneur • Advisor
Big Data Architect, Engineer, Trainer and Agile practitioner
Before i started clickjoy.com which has been successfully launched, I started on a great idea and got 2 co-founders , everything was exciting , i could feel the chi flowing. Even talked to angels, invested some of my own money into outsourcing the UI look and feel. However soon the symptoms showed, my cofounders had to take their kid to the hospital, travel here and there, wife got sick, too much work, scared of layoffs, this weekend,next weekend, definitely wednesday etc etc. I was the only one working hard and after 2 months of excuses, neither of them did *anything* i mean literally - not even accessing the machines when i monitored the logs.

So finally i called quits. i still believe in the idea and maybe someday i shall find the resources to pursue it but for now i just made a practical decision instead of an emotional one.

not sure what your story is but my advise is not to cut too much slack when dealing with a cofounder, give a few deadlines and if they dont meet any in weeks or a month , simply let them go.

* on a side note this is why NEVER ever register the company with a cofounder's signature before the probation period- else you are looking for a nice law suit when you do succeed eventually. Also suggest atleast asking them to email you a disclaimer for your records so they cant claim you stole their ideas.*

Regards,
Sridhar Alla
clickjoy.com
Bill Kelley
1
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Bill Kelley Entrepreneur • Advisor
Business Mentor
I have walked away from a couple.

It's what you have to do when you have exhausted all possible routes to fixing the company.

In one instance, it took 68 VC presentations to get the company funded, and the VCs we ended up with were ignorant of the market segment. They named their own CEO who turned out to not only be ignorant of the segment but also uninterested in learning. After appealing to the Board and to other management, it was clear the $40 million idea was going to be made into a $2 million idea (after $4 million in investment) and I walked. (it's headed to $0 value now)

In the other instance, majority shareholders went off mission. They over-focused on the easy part (fun part) of the business and allowed development of the important part to stagnate.

Before walking, I appealed to the Board; to other management people, etc. Basically the same thing: you fight until you confirm there is zero possibility of changing course (and self-examine to be certain their course isn't better than the one you love).

Startups are like marriages. Divorce is so awful that you need to exhaust every alternative.
Jeff Whelpley
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Jeff Whelpley Entrepreneur • Advisor
CTO at GetHuman.com
I read Seth's Godin's book, The Dip, about 6 months ago and at the time I thought he had some good insights on this topic. The basic jist is that almost any achievement with value is almost going to be hard by definition (i.e. otherwise everyone could do it and it wouldn't have as much value). So, it is not a surprise that when you are trying to change the world at startup, you will end up wondering often whether you should quit. Godin advocates that you think about what your life will be like if you achieve your goal and whether the pain you will have to go through to get there is worth it (i.e. is the reward even worth the investment if you assume you will eventually get there). The other big takeaway I had is that in order to avoid putting yourself in a situation where you are not sure whether to quit or not, you should identify up front, before you start a new venture what the conditions would have to be in order for you to quit. Theoretically you would be able to set criteria in an emotionless way and avoid the feelings when you are in the heat of the battle.

Now, the funny thing for me is that while I thought the black and white mentality sounded great when I read it, I found that reality has a way of making things more difficult. In particular, I think that most people are really good at making excuses to themselves and it is very hard to fight, even when you are conscious about what is going on. In my case, I had set the criteria when I would quit several times over and kept changing it because there always seemed to be a mix of both bad and good news (ex. we didn't achieve close to the growth I expected, but we suddenly had a lot of promising interest from a couple big clients). And as far as thinking about whether the reward was worth the effort, I probably changed my mind on a daily basis.

My advice would be to evaluate whether the reward is worth the pain and set criteria for quitting, but also try to reach out to as many people with different perspectives as possible in order to try and get an objective view of your situation.
Michael Brill
0
0
Michael Brill Entrepreneur
Technology startup exec focused on AI-driven products
I'm living this issue *right now*. In an environment when success is just a pivot away, how can you ever say die? Investors and employees gamble on you and in most cases there's no definitive black/white answer. I set deadlines and then when they approach I rationalize extensions... and I guarantee you that each one of these makes sense in its own right. But at a macro level it's WTF?

I've definitely walked away from companies that I felt weren't going anywhere, but when you know there's a pony in what you're doing but you just can't find it yet, it's really, really difficult. Do you double-down or do you try to get a bit of distance (e.g., by working on a side project or spending more time helping out other companies)?

When it's your own money it makes it even more challenging and you get a much better view of your own risk/reward tolerance. Especially when your wife keeps asking why you don't go get a job!

Clynton Caines
2
0
Clynton Caines Entrepreneur
SharePoint Developer at Discover Technologies
Maybe the article should be titled "know when to hold 'em"?

This thread addresses the question of folding 'em more clearly - and I agree with most that it's definitely a gray environment in which we have to decide. I've spent years building relationships and executing the plan - trying to gain traction. Then, when all seems lost, traction finally arrives in one form or another, but is it enough to spend more months/years on the project? Only you (and your family sometimes) can tell. One thing's for sure: It often feels better to cede the space to someone else and go after a market that's a better fit (there will always be something else for creative people).

I think the real gem in Micah's post is that it's important to take time away to gain a new perspective. In my experience this can happen a few ways: 1. take a vacation! 2. do another side project or the full-time gig 3. force yourself to focus every day on executing, but (also everyday) take a break to look up and survey your trajectory.

Michael Brill
0
0
Michael Brill Entrepreneur
Technology startup exec focused on AI-driven products
+1 on the time away, even if it's going from 70hrs>30 hrs for a few weeks and focusing on something else. I found it does a few things: (1) you realize that pretty much everything is hard - so that other idea you were thinking would be better to pursue because it's dirt-simple starts to get more complex when you dig into it. So it weakens the pull of doing something else. (2) you can free your mind from the grind you're in - the grind where it's almost impossible to creatively think your way out of your situation. Creatively generally comes from integrating disparate concepts so you need to expose yourself in meaningful ways to things other than your one idea. (3) if you really feel a sense of relief and really dread going back to what you were doing, then maybe it is time to move on.

I did just this a few weeks ago. I started working on another idea, helping a friend's company, went to a hackathon and then on Sunday I had a breakthrough idea that would have been impossible without those activities.

The other lesson (for me at least) is really try to stick to lean principles and try to avoid getting into the situation in the first place. It doesn't address all scenarios, but probably 80% of them.




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