184. Three Ways To Shut Down & The Terminal Plan

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There are ways to shut down: The Ghost, The Bonfire, The Refund. But there's also a great way to sell your startup. That advice is not mine to share, so go read this presentation by Geoff Lewis: The Terminal Plan

https://www.slideshare.net/justGlew/the-terminal-plan-how-to-sell-a-startup-geoff-lewis-presentation-sxsw-2013

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Transcript

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I've been debating what this episode should be about.

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At first, I was going to talk about the trope that VCs like to drag out when startups go under.

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"It's better for the economy when bad startups fail.

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Those founders can put their energy towards something more productive." I hate that I'm about to affirm that, but I have seen founders shut down their startups and go on to have incredible careers elsewhere.

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Sometimes making boatloads of money.

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But I would never be so presumptuous as to suggest that shutting down a startup was the best thing for someone.

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Next, I was thinking about talking about the three ways to shut down.

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The Ghost, The Bonfire, and The Refund.

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The Ghost.

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Well, you can guess what happens there.

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Website's down, emails bounce, calls and texts are not returned.

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The Bonfire, on the other hand, is the founder that burns the cash all the way down to zero.

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Only to realize that running a shutdown process requires lawyers.

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And lawyers, cost money.

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Oops.

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As for The Refund.

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We had one founder who knew after about a year that what they were building, wasn't going to work.

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They stopped.

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Let everyone, go cut their burn down to near zero, and explored a number of pivots.

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When they realized there was no path forward, they ran a shutdown process and returned what was left to their investors.

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And look, it was dimes on the dollar; it's not going to make a difference for us.

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But man, it was classy as hell.

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And we appreciated that.

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Now that I've managed to talk about the two topics that I decided to not talk about.

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I've barely left any time for the thing that I really wanted to share with you.

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But you know what, it's not my story to tell anyway, and it's something that you need to go and read.

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Regardless of where you are in your startup, I want you to search for Geoff Lewis, his presentation,"The Terminal Plan: How To Sell A Startup." Link in the show notes, of course.

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It's a fantastic read and a step-by-step guide about running a process to sell your business.

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Here's slide 11: Decide To Sell.

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1.

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Things are not going according to plan.

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2.

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You've run out of alternate plans.

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3.

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Both one and two are well kept secrets.

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And 4.

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You have time.

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And I'll give you a hint: having time means at least six months of cash and team runway.

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And he goes into why both of those are needed.

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So hit up the show notes, find the link to The Terminal Plan, and go read through that.

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Regardless of where you are in your startup journey I think this is an excellent piece to digest and just having the back of your brain'cause you never know.

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I'm sure you will not need it, dear listener, because you listened to the VC minute, but somebody else might benefit from it.

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Tune in tomorrow to hear from my good friend, Eric Marcoullier.

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I can't wait to share these next two episodes with you.

184. Three Ways To Shut Down & The Terminal Plan

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