Jason Calacanis has some great thoughts about what to do when you think your startup is about to fail. I’ve gone through this experience once as a founder of e-thepeople.org, and I’ve seen it at a couple of companies that my friends have been involved in. This advice is bang on. Let me summarize, and you can read his long but highly readable original missive here.
1. Test your funders. Tell them you believe, and that you are going to stretch things out but you want them to put in more now (even though you still have a ramp).
2. Test your employees. Make the cuts. Consider salary reductions, but make sure that the employees who remain are still happy.
3. Test your landlord and vendors. Negotiate for a little free rent, subletting permission and other discounts. Losing you completely is not in their interest.
4. Put yourself to the test. Offer to sell your car to put the money into the company! Take the same reductions as the staff.
5. Put your product to the test. Make sales calls yourself. Celebrate the process of sales: new leads, pitches, etc.
6. Know when to quit. Use your last 120 days of burn to wind down honorably.
Great stuff–thanks Jason [x2].
(And if you are as obsessed with failure as I am, check out my other post “Why failure isn’t the worst outcome.“)
1. technology, 3. et cetera
According to the NYT, angel funding for start ups is drying up. Although this story is anecdotal, its mere appearance in the illustrious NYT can be a self-fulfilling prophesy. They do mention a couple of brighter spots:
Some angels are considering only low-cost companies that could become profitable without venture financing. Others are acting less like angels and more like venture capitalists, spending much more time than is typical advising companies, including taking seats on boards.
This approach–getting to profitability quicker–is definitely on our minds as we get our start up SocialFeet.com off the ground. We’d also love to have a qualified lead angel who wanted to be more involved. We had already thought about getting smaller dollars amounts from a larger group of angels, as suggested elsewhere in the article.
Finally, I found some unintended irony in the article. They mention that angels are backing off from investing because they are wary that venture capitalists have already turned off the spigot. Yet, they end the article with Mark Heesen, president of the National Venture Capital Association, saying “If we don’t have angels, that hurts us. Where are we going to be getting our next Series A deals if those entrepreneurs aren’t out there with the ability to move their idea forward?” So who’s to blame here anyway, the VCs or the angels?