We started the company two and a half years ago, and raised $7.3m in 2024 (announced only almost a year later). We've spent less than half of this amount.
Earlier this week we came to the difficult decision to wind down the project. The open-source repository remains available on GitHub (Apache 2.0) but won't be actively maintained by the team moving forward.
Now one question that you probably get a lot and I must ask: why not pivot?
News like this is reinforcing the narrative that frontier models and AI outsourcing generally is on the way down.
The other half goes where?
We are returning the remaining capital to investors.
Familiar with creditors getting divvied in bankruptcies, but not refunds to investors… oh it’s because there’s never any money left when things wind down. (We hear of retail stores where employees discover closures posted on shop doors when reporting to work.)
Early stage startups tend not to have a lot debt to pay off, because there aren’t many places willing to offer them much credit.
When after a few months we accepted that it wasn’t going to work, our investor got basically all his money back.
It was pocket change amounts compared to the sums of money that they deal with in Silicon Valley. But the point is the same anyway, the investor got back basically everything.
Ended up having to wind it down because it was a stupid idea and I realised quite quickly after spending money on it. Was a small amount of money but a lot for me. Luckily the investor never asked for money back.
Wound down my second one too but lost no money.
Then came into some money through a software sale about 7 years later, and offered to pay the first investor their full investment back, which was about half the money from the software sale (my only sale ever).
They really appreciated it but declined and instead said no, they want to invest in me AGAIN in the next one.
Felt really nice to have someone believe in you so much they would open themselves up to money risk again rather than take their initial investment back
It would be depressing if your first painting was your best work.
Honestly, I was close to flagging this story because the title is deliberately manipulative - it makes it sound like the founder did a rug pull. But I was really glad to see the founder come in to these comments and just say we tried, but the market shifted under us. Happens all the time.
The title is misleading unfortunately but that's how social media goes...
Perhaps now, but during the Zero Interest Rate era, the received wisdom was founders ought to keep going until there bank account was empty, in the hope that they may salvage returns for investors. Vendors, partners, clients and employees would be screwed, naturally, but it didn't matter because VC preferred it because losing all the money in a desperate gamble was preferable to lending money to startups at 0%
Amusing that they managed to create a business strategy that depends on the sunk cost fallacy being wrong.
Major pivoting is almost always a really bad idea. (I admit I'm doing a bit of weaseling using the "major" qualifier, but when I searched for examples online, a lot of the ones that came back weren't major pivots, just slight refinements of focus to find better product market fit). Pivoting usually carries a lot of baggage - better to just give the money back and start afresh most of the time.
It takes maturity and decisiveness to recognize when a startup's core idea isn't going to work. In cases where any pivot wide enough to get into different lane is essentially a whole other business, it's often better to just shut down. Even if the last desperate pivot starts to work, you often have some team members and investors who aren't a good fit for the new focus and, worse, the 'new' business that's finally starting to work is almost out of money and the cap table is messed up. It's usually better to shut it down and reboot cleanly.
Founders who've successfully raised millions and executed well are usually quite fundable, even if their first startup didn't work out. Sometimes the timing is wrong or the market evolves differently. The key is how well you think, execute and communicate through both the windup and the wind down.
I might publish a long-form reflection when the dust settles.
Very early in my career I used to believe that I or anyone else could be a CEO.
It wasn't until working with tiny teams where the CEO/founders devoted everything in their life to the business -- often at the expense of hobbies, romantic relationships, and any shred of free time -- that I realized true CEOs are a rare breed.
When are you ask things like "what happens if the product fails?" the answer would always be "It won't."
They both relentlessly believe in, and put every ounce of energy toward, their vision because anything less would not suffice
Again as trite as it sounds, I empathize with these people in that to them losing their vision felt like losing something dearest to them
In smaller startups, everyone is directly involved and has to punch above their weight to pull through, not just the CEO.
Also devoting everything in your life to one thing is not a mark of intelligence or skill. It is a mark of dedication but by itself means little.
And yeah, not everyone can be a CEO because most business fail very quickly. There is always an element of luck in those that survive.
But the idea that you devote 24x7 of your life hence you must be a good leader is not accurate. In fact, if you press this culture downstream, you'll tire your workers and the rest of the team.
For example: I cannot imagine being a successful touring live performer. I am an introvert, I keep a rigid schedule so travel throws everything off, can't keep myself awake very late...
Could I perform the functions of a live performer? Yes, though no matter how much I "tried" the mismatch between the job and my natural tendencies is a recipe for failure.
> not everyone can be a CEO because most business fail very quickly
These are not examples of in-born traits. While I agree that not everyone has the motivation to become a CEO, I would disagree that a person cannot learn and adapt.
Being a bit delusional is a critical quality of some CEOs, so the distinction hardly matters.
The problem with your point of view is that "Love of cocaine" is one of them, it's near the top, and you'll never acknowledge the fact.
> The problem with your point of view is that "Love of cocaine" is one of them, it's near the top, and you'll never acknowledge the fact.
I don't get why one can't easily acknowledge the slightly weaker statement that traits that are inherent to successful CEOs might be positively correlated to being prone to a love for cocaine (which says nothing about any causality).
I think the problems with "successful" CEOs don't paint the complete picture. Many CEOs come in after the hard work has been done and "final phase" CEOs enshittify the product and treat their partners and customers vastly differently than they did during their build phase. I experienced this first hand at Palo Alto Networks. At the time their second CEO (Mark McLaughlin) had just come into the org. Mark was one of those few genuine CEOs I experienced, probably one of the least narcissistic I've seen at that point in a young company's trajectory. However Nikesh Arora (Mark's successor) is a complete narcissistic asshole. I still talk to many in leadership there on the regular and the consistent theme is he's surely the reason PAN support and product quality has taken a dive compared to the engineering focus on product and customers back in the early 2010s.
There are a lot of papers surrounding CEOs and many look at the narcissistic angle [0][1][2]. The reality is a lot of these companies could operate just fine without a CEO. I find it hard to believe CEOs are even remotely worth their compensation packages given most of them have zero clue about the product or customs they serve anymore. This all flows back to the "shareholder value" bullshit the US economy is built on. If corporations had more restrictions in financial engineering maybe, just maybe, they'd actually try to better compete within their product/service space.
[0] https://www.gsb.stanford.edu/faculty-research/publications/n... [1] https://journals.sagepub.com/doi/10.1177/0149206319892678 [2] https://corpgov.law.harvard.edu/2021/10/25/are-narcissistic-...
I.e. Not the majority of celebrity CEOs with golden parachutes and underpaid employees. Only in the position thanks to "my dad knows his dad and we went to the same school" nods and winks. It is the objective truth for most executives.
This isn’t true. It’s easily shown to be not true by looking at all of the CEOs who had success with one endeavor and then failed all of their following startups, or the other way around.
A lot goes into founding a successful company. Not all of it is in anyone’s control. Not everything can be overcome by a CEO with powerful motivation.
Some times the market moves in ways nobody could have expected. I even worked at one startup that was destabilized and ultimately failed due to a natural disaster.
Looking back at the startups in my past, some of the worst CEOs were the ones who paraded around their ideals about failure not being an option or who pretended that they could get the company through anything through sheer force of their will and the power of their dream. One CEO who was all about “never give up, never surrender!” thinking ran the company into the ground because he refused to let us pivot after the initial idea didn’t get traction in the market but some other features were getting a lot of interest.
Some times knowing when to call it, move on to the next thing, and stop stringing your employees, investors, and customers along is an important CEO skill.
In one instance he raised the price of something by 1000 times without adding anything extra. His explaination was that it would build the right community. In his opinion people were to negative/sceptical and talked to much about what things cost.
Cost him 90% of the customers innitially then grew by 100ish%. As if some high end comedy the 90% said it was to expensive and that it would never work. The other 10% really needed to see what would happen.
Is there a way to reach out to you as I would like to hear what you have to say about what I am working on. You can update your HN profile to include contact information or you can reach out to me using my HN profile.
I'm basically working on a portable intelligence layer for AI that I will be open sourcing and the commerical product will be to make the intelligence layer even smarter. I can share the Show HN post that I am working on that better explains the value proposition and would love to learn any lessons you have gained while trying to sell AI tools commerically.
Edit: In case somebody calls me out it. I didn't want to use the `tensorzero` email domain incase the domain was going to become defunct soon.
and domains are cheap.
I’d shoot the note now if the feedback could be valuable.
The only way this could be a 'lesson learned' is if you homehow managed to not pay any attention to what has been going on in the last 25 years with open source software companies.
That's why it's called learning.