I turned down $500k, pissed off my investors, and shut down my startup (2016)

Both startup founders and investors alike seem to forget this (for obvious reasons) so it is good to put this on your toilet wall so you see it often.

I'm surprised (and delighted) to see this back on Hacker News. I'm happy that people find value in the article, and the process writing it forced me to put my thoughts together and helped get me through an emotionally difficult time.

To address a few questions from the comments.

1) A common opinion is that I gave up too quickly, that I was just burned out, or taking the money would have let me figure things out later. This was simply not the case. An experienced mountaineer knows if a mountain is climbable with the team, gear, and weather he has. This one was not.

2) I would have been 100% fine with the team and investors going ahead without me, but AFAIK, neither side ever discussed it.

3) We were absolutely not viewing contract information, and would not have been able to do so even if we wanted to. We anonymously logged when functions were called without storing user or input data of any kind.

4) Six years later, I'm doing well. The Disrupting Japan podcast is going strong. I took a senior role in corporate VC for a while, and ended up at Google.

I was overwhelmed by the attention and positive response I got from this article. The asymmetry of value of money and time was one of my main learnings, and I'm glad to see it resonates with so many other founders.

I know it is childish, but I always enjoy this difference between US and British English.

In British English when someone is annoyed they may be described as 'pissed off'. Describing someone as being 'pissed' means they are drunk! These US articles paint such vivid surrealism in my mind. In this case I love the idea of all of the investors being permanently inebriated.

There is a lovely part of the 'special relationship' where the US doesnt care what the UK thinks of them, and therefore the UK has great fun at their expense. I suppose that is a win win situation? The US projects an image of being the leader of so many things, and the rest of the world jokes about how arrogant this is.

I am sorry it didn't make it, but, as the author points out:

> Human nature sucks.

Yup. I have to design for human nature, and it can be immensely frustrating. I can tell you that this scar <pulls up shirt> was from when I neglected to plan for users misinterpreting an icon button, and this scar <rolls up sleeve> was from when I thought that a verbose help screen would help users understand a somewhat abstract concept, but this scar <drops pants> was from when I assumed that users would cut me slack, because I'm such a nice guy, and was doing this from the goodness of my heart.

This is the main reason that I'm glad he pulled the plug:

> and the team ready to quit their day jobs

This affects many engineers including myself. In many cases over working is not necessary and there are diminishing returns, possibly even less overall net returns if you burn out or become too sleep deprived and stressed to function efficiently the following days. In this case he quit, which is an example of this.

As engineers we have to learn how to manage expectations and disconnect from work. As engineering leaders we need to foster a culture of maintaining good work life balance. As founder and CEO, he's in the best possible position to do this. Especially in this case where there is no external deadline.

“This article was first published in Medium and appeared in VentureBeat & Business Insider”

I get the syndication and the other outlets using this content at the time it was written (2016). There’s just something very dishonest about the slapping the words on a page with some stock images 6 years later though.

I don’t really have a point - maybe it would be better to link to the original medium (I know) post though?

https://medium.com/startup-lesson-learned/why-i-turned-down-...

Edit: on the other hand the article itself is very honest. And it’s an interesting question.

Altfront: https://scribe.rip/startup-lesson-learned/why-i-turned-down-...

> Almost no SMB views contract management as an urgent problem.

If you are a solving a problem your target market doesn’t care about, you’re not going to get adoption. This isn’t a product problem or a top-down vs bottom-up problem.

I would have definitely took the 500k.

Needing sales doesn't mean the business is to throw away, it just means you need way more money than you were thinking.

Probably 500k wasn't enough to execute the scale the founder imagined, but it could have been a good intermediate step to raise more money later on.

But the whole matter could have been avoided if you were solving a problem you actually cared about. Then there would have been no doubt if you should or should not invest another year of your time.

You also have a fiduciary responsibility to the investor and a responsibility to the team members who worked equally as hard.

You do the real hard work, they provide numbers in a computer database (and often kick you out once this hard work is done).

I’m assuming they had a better way of analysis than actually reading contracts since most vendor procurement processes I’ve seen require attestation of data privacy..

>> Now, talking with customers about features is tricky. Often you receive solid and useful ideas. Occasionally a customer will provide an insight that will change the way you look at your product. But most of the time, customers don’t really want the features they are asking for. At least not very badly.

This a thoughtful, well-rounded and obviously experienced view, but ultimately it shades toward being very pessimistic about the competence of the end-user.

>>When users are unhappy but can’t explain exactly why, they often express that dissatisfaction as a series of tangential, trivial feature requests.

Clearly, the writer had the self-reflection to realize that the product wasn't working, and for that should be applauded. On the other hand, maybe there's something a little intentionally self-blinding about the above statement. Assuming that people are just putting out meaningless feature requests because they'll never use the software anyway is, to say the least, taking things from a very negative starting point of view. Maybe something larger was actually missed in the "tangential, trivial feature requests" which if compiled would have pointed to a fixable underlying problem if one were take them seriously as a constellation of indicators pointing to a root issue.

This is speculative:

>>These aren’t necessarily bad ideas, but they had nothing to do with why they were not using ContractBeast more extensively.

This is indicative of burnout, where you stop seeing the value (for other reasons which are harder to quantify):

>>In any event, I was overwhelmingly getting these kinds of tangential, trivial feature requests.

And this is resignation:

>>It didn’t provide a significant immediate benefit. I was fighting human nature and losing.

If I'd been sitting around that office, I might have suggested adding a human consultant to the loop for every new client from onboarding to full use -- not a virtual pop-up box, but someone they could call on the phone. And not to sell anything but to suggest uses and help implement the changes to the customer's business ops that they would then come to rely on. Mid-sized businesses don't make drastic changes overnight but that's also a guarantee of lock-in if you can convince them to rely on your product. So you'd give each one a sort of a "guardian beast angel" if you like, who was available at all hours. The sole purpose of the employee would be to track a few dozen customers and their user experience, really understand how this worked in their business models, and find ways to improve their use of the software while filtering back some feature requests and bugs. And thus get the customers to realize the full benefits of the software, without any attempt to sell them anything. This kind of thing would be a loss leader, it would be money out of pocket, but it would be far more cost effective than any kind of advertising, and it would establish trust and good word of mouth in addition to providing a customer base that was now dependent on you. Also, it wouldn't have involved actually writing any new features if you felt that the software was already sufficient to the tasks most users would require, if they knew how to use it properly. It would also give you runway to roll out new features on your own timetable without constantly trying to please an audience, since the customer-facing "beasts" would provide workarounds for niche use cases and reassure them personally that improvements were in the pipeline.

A founder has a team (investors are part of that team) that trusts each other to have incentives towards having the startup make it big.

Ditching the team and investors like that is extremely distasteful and shows that the founder does not have the qualities to be a leader.

The founder didn’t do the right thing, he did the selfish thing by throwing his employees under the bus.