There's a time to get tough and keep building our startups. And there's a time to be honest about simply folding the tents.
The problem is that our own egos can rarely distinguish between the two.
We hear these (revisionist) stories of great entrepreneurs overcoming insurmountable odds to build the great companies of today, and we assume that in order to earn our own tale, we'll need to bring ourselves to the brink of destruction to do the same.
But the truth is, more often than not, the idea of running ourselves into the ground is just that: we're just killing ourselves with little upside or glory on the other side of the journey. As Founders, we need to have an honest dialog about when it's really time to put a bullet in this thing for the sake of our own sanity — as well as those that love us.
The most binary sign that we should fold the tents is always "we don't have any money".
And that's true.
But let's face it, we've burnt through many forms of capital by the time we got here:
There's a point at which our startups are building our future. But there's also a point at which our startups are destroying our future — when every facet of our capital is exhausted, and getting worse.
When we reach this point, it's time to call this thing a wrap.
Losing sucks, and building a startup is an exercise in losses, both financially and emotionally. But we soldier on because not only do we not want to win, we also don't want to lose.
At some point though, it's no longer about winning — it's about "not losing." The moment we're no longer focused on the win, or when we can't even see a win in sight in any scenario, but we wake up every day to keep our dream alive just so we won't lose — we're screwed.
Startups aren't built by not losing.
"Not losing" becomes our focus when our ego takes over from our logical mind. We're no longer thinking about how this startup could do something great, we're thinking about what those conversations will be like with our friends and colleagues when they inevitably ask, "So how's that startup you're working on going?"
Sometimes the most "big girl" thing we can do is to admit when a loss is a loss, to ourselves and to all of the people connected to our startup, including the people who love us. There's no one that is going to say, "Boy I wish they had kept running themselves into the ground."
There was a time when we were so excited about our idea we couldn't shut up about it.
Any poor fool who had the gross misfortune of sitting next to us on an airplane or across from us at a cocktail party would be stuck listening to us vomit our hyperbole incessantly. We meant well because we were so passionate about how "world changing" this idea could be.
Nowadays? Not so much.
When we've lost that spark, that boundless optimism that kept us trudging through the mud no matter what, we're in for a tough ride. Especially if the business isn't faring well.
Startups are powered by optimism, and when we've lost ours, it makes it really hard to continue marching without that energy. And if we've lost the passion as Founders, we can almost certainly expect that same passion to go away with our team.
There's a last ditch version of the business where we're no longer even trying to operate or grow the business for ourselves — we're just trying to do everything we can to "save our investors" from losing money. We asked our family, friends, advisors, angels and other professional investors for real money.
And now we are on the brink of losing it all.
When we can, we should always do right by the people who have taken a risk on us. But there comes a point where the most mature thing we can do is call a loss a loss.
More Founders will run themselves through the ground, usually resulting in massive losses to both their health and what's left of their personal capital just to avoid having to tell their investors that they took a loss. What's crazy is most of the time those very same investors have long since wrote off the investment well before the Founder did!
What's left is a Founder running themselves into the ground to avoid a conversation with an investor who already expects the outcome.
If these scenarios sound familiar, it's because at a certain point you really know it's time to fold the tents — you're just not willing to admit it.
The worst thing any of us can do is hold on too tightly to something that's not meant for this world. It's not about giving up — it's about moving on. All of that time and energy and capital being wasted on a lost cause is much better invested in a new, viable venture that trades negative investment for a positive outcome.
If the signs are pointing to "closing time" for the business, the only thing we can do wrong at this point is continue living in denial.
Fold up. Move on. Life is too short, my friend.
Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.