13 Lessons From The Wind Down Of My Start-Up

We have shut down @Meenta!? R.I.P.?

We reach $15m in total sales last year, but we struggled to turn on non-COVID revenue on the tail of the pandemic. Coupled with a convergence of other forces some out of our control and the funding climate our board, despite my objections, made the decision to wind down.

Since it’s so common to see success-only posts and articles. I am sharing a baker's dozen lessons learned;

1st Lesson: Maintain control of the CAP table as long as possible. Being too generous with equity can lead to imbalances in the direction you NEED to take the company during hard times. Not everyone has the same level of tolerance for risk as you do. Let me repeat. IF you as thee founder and this is your brainchild then by definition you have the highest level of tolerance to pain. PERIOD. You are the best equipped to represent the best interests of the company.

2nd Lesson: Minimize opportunistic deals that diverge from your main business model. As a marketplace Meenta never had inventory. However, we were faced with tantalizingly massive opportunities that “required” us to take in huge amounts of inventory. This forced us to build a warehouse and other infrastructure that made our financials heavier and less attractive to investors when we needed to raise quickly.

3rd Lesson: Stay away from “sugar daddy” customers. ?Becoming dependent on one single huge account can kill you. When we could not close thee one deal that 90% of these assets were needed for we were stuck selling assets that had a declining market value that eroded our margins, cash position and growth rate…tough to raise that way.

4th Lesson: Always hire “A” players using analytical methods as much as possible. It may seem like you can’t afford the best, but the best is the person who fits at the right time for the right stage of the company. Bringing on B players reduces the performance of the A players. Real-A players aren't attracted only by the money. They are driven by a vision and mission to change the world. Stick with the results of your hiring process and ignore your “gut”. Your gut is your brain stem and very emotionally driven resulting in poor decisions during times of stress where cortisol interferes. A corollary to this is don’t give away “C-level” titles lightly and take it away quickly when people don’t function at the leadership or board level…there can be little room for grace here.

5th Lesson: Be rigorous in documenting payroll & legal issues. ?Failing to document decisions around who gets paid when and why will come back to bite you. So you think you’ve known your core team for years? You’ve known your vendors too. So, taking shortcuts on the legal ease may seem justifiable, especially given the costs and time associated with good legal representation. Wrong. See #1. No one has the same level of tolerance for pain as you do and most team members will revert to self-preservation when faced with a choice between the company and themselves. By putting the right paperwork in place we people from taking shortcuts because sometimes it’s much easier for folks to walk away than stick around and work through the pain.

6th Lesson: Sell early. ?It’s tough to say but when faced with a choice of walking away with a life altering amount of money vs growing your beautiful baby. Hand it over as opportunities to walk away with seven or eight figures don’t come along very often. Listen to yourself especially since your interests as a common shareholder do not align with the preferreds and others.? You have one bet on the table and the folks on your CAP table may have 10 bets. You WILL lose more often than them. So take the chips off the table when you can…no shame in that! Like @Jay Batson once told me “what do you want to be famous or rich?”

7th Lesson: Hire a legal team that can handle the bad times too. It seems easy to set up the new co and most firms will do so for at no charge. However, avoid the easy street of taking the “template by-laws” baked into the new company documents. Read and understand the fine print of how board meetings are called, who controls what and when etc. It matters when you really need to take a certain way.?

8th Lesson: Go to your network early when you are in trouble. Your network is more powerful than you alone. Often they won't understand the full context of your situation, but they are invested in your success.

9th Lesson: Toxic people won't change. Fire them ASAP. See #4. When you have doubts about keeping someone that is the signal to help them move on. No time for rehab in a start-up.

10th Lesson: The company grows only as far as you grow yourself personally. We know this with our life partners, children and extended families, but often fail to apply it to the organic growth of the company. Organic, not financial. Any personal insights you gain personally WILL translate to everything and everyone around you. So take care of your soul!

11th Lesson: Don’t confuse legal advice with what the business needs. ?Attorneys can be huge assets minus the caveats in #7, however, they are a risk-averse species. Since 99.9% of start-ups fail we as founders are not risk averse and neither are investors who get it wrong 90% of the time too. So, take the legal feedback and then do what’s best for the company. Not best for you personally. Not best for the lawyers. It’s about your shareholders, stupid!

12th Lesson: Make the right first call. The first person you call when things go bad says a lot about your integrity, intentions, and motivations. Who is that one person? One investor. One debt holder. One partner. One advocate. Call the one who holds the shortest string on the company. Make this call despite any legal advice…because you know it’s the right moral thing to do. This will come back to you in good karma later.

13th Lesson: When it’s all over take care of those who took care of you. Just because the business failed doesn’t mean you can’t find ways to take care of folks who supported you during the process. Be creative and plan them for your next venture.

This is the way!