Dear Investors, My Company Failed and We Lost All Your Money.
erica.biz
erica.biz
In a weird, abstracted way, I'm reminded of the fantastic game Glitch's shutdown:
http://www.glitchthegame.com/closing/
I don't know Erica in real life (though I've read her blog for a while), and I've gained even more respect for her. I can only hope she finds the success befitting her passion and integrity that the folks at Tiny Speck did.
While we were perfect for each other when we first met, I can agree that we are no longer 'right' for each other. We have amazing paths ahead of us and I'm so grateful for everything we had together.
When the .com crash hit we got within a hair of going down. Fortunately we did not have any investors that I could not have paid back from my private pocket (which I eventually did, I bought them all out). If not for a little bit of foresight and a 3 month warning something really bad was going to happen (24x7 missing a check payment) we'd have been absolute toast. And with 25 people on the payroll that would have been totally devastating.
At that time we'd spent a lot more on our ramp-up than Erica ever did. And blogging had not yet come into fashion, but I'm sure that if I had written about it at the time you'd have made it sound like I was callous or had too much ego because it was other people's money and trust that I was playing with.
But the big factor that counters that is that if it is a success you get to own it, if it is a failure you own it even more. For Erica to come out about this publicly takes a lot guts, probably more than I would have if I would fail making payroll. That's brave, it is the absolute opposite of ego, the fact that others trusted her and gave her money would have made them part of the success, inevitably, if it goes wrong then they are also part of the failure.
Start-ups are risky, everybody in this game should know that by now. So embrace the failure, learn from it what you can and move on, and by all means, don't sit down and mope. That would really be a loss.
You are a deeply broken person if you think that running is courageous.
Being a boss is not for everyone. My company had $15M in receivables due from Countrywide when it filed for bankruptcy. I had a $8M line of credit that would default and a nearly $2M in payroll, due in 7 days.
My partner and I didn't blog, or cry, or get in a chat room and fire people. We faced the music and talked to every employee personally, visited the ones we could and called the others. The banks lived in our office. We were lucky, and our debt to CW was classified as secured, our employees were on-site contractors and their payroll was paid in full, w/interest from the trustee. 131 days late. My partner and I didn't take a paycheck for a year, I liquidated my savings to keep the lights on in my house. We sold the business 2 years later and my investors got their money back, and a little more. We were lucky, but worked hard for that luck.
When it was tough... we didn't think... "Oh I'll fly somewhere and be a consultant... I'll be fine, I'll bounce back and my new client will pay a pretty price, for my business genius".
I worried that I'd lose my house. That I'd never find another job. I was terrified. But I didn't show that to my family or friends, and especially my employees. Someone had to be in charge and risking everything is the price of that position.
If your attitude is that people should understand the "risks" of investing in a start-up when the founder develops a video game addiction when she should be working. I'm sorry I don't feel sympathy for that. That's not courage, its disgraceful, it's arrogance.
If Erica's response to failure is to run and hide, I'd say she's not cutout to lead. I'd also say she did herself a huge disservice posting it online. I don't think future investors will think handling failure by running off will be a good investment. Additionally, her brave post might leave her open to a shareholder lawsuit, for breach of her fiduciary duty.
I can't imagine anyone hiring this woman for anything after reading this. But the sense of entitlement runs deep in people under 30, so she may find a sucker.
(mine is ww.com/camarades.com, still alive even today).
I'm reading that as that she saw the end was inevitable, this could of course be wrong but it is quite ok to take some time out to think this over if you are that far down.
Better to take a breather and then to come out whole and composed than to break down during the winding up phase of the failure.
Failure, real, visible failure can be very taxing on the system.
My way of dealing with that is to avoid it at all costs ;)