Pulling the Plug

Jay Dia — Fri, 04 Apr 2008 12:59:59 +0000

It is ironic that my first blog under the category Startup Guide should be about winding down a company, but many times looking at a bad ending is a good way to learn about assessing risks in the business you are starting.

This past Monday, we pulled the plug on a startup and filed the papers dissolving the company. It is never a pleasant thing to do, but sometimes, it is the best course of action.

There are many valid reasons for saying Sayonara to a startup, and this company had the killer combination:

It was running out of money in the bank;
It was bleeding money year after year;
Its market landscape had changed and there was no way the company could survive in the new climate with its current business.

It is the third one that is key, as it meant it would never be able to generate the revenues to grow, let alone survive.

If your market changes you either have to adapt and refocus or you are dead. Investors fund companies that are in growing markets, not stagnant or dying markets.

Pay attention to the market you are in — if it changes, be prepared to change along with it. Otherwise, you may set yourself up for a Sayonara Startup scenario…

Eye on Startups: » Saying Goodbye

Pulling the Plug