Starting a company is an uphill battle even in the best of times. 2020 was not the best of times. While we don’t yet know the startup mortality rate for this annus horribilis, the pandemic derailed some of tech’s best-funded ventures (Quibi, Bird) and left entire industries reeling. For every business that has thrived during Covid-19, dozens of others are limping along or quietly winding down.
As startup founders face the prospect of starting over in the new year, how do they know when to throw in the towel? What are their career options afterwards? At Rippling, the HR and IT software firm where I work, we make a point of recruiting former founders—we have more than 30 on staff, including seven alumni of Y Combinator, all keen to put their entrepreneurial experience to good use. We asked five of our entrepreneurs who shut down businesses in the last year to weigh in with their advice.
Be brutally honest
It’s true that many enduring businesses are forged during hard economic times. But it’s also true that if your product or company wasn’t really working a month ago, it’s probably going to be working a lot less well going forward. There are incredible stories of Silicon Valley pivots that turn into jaw-dropping successes. But those are rare. Unless you have an endless supply of conviction, it’s time to admit your company’s pivot probably isn’t going to work.
Neha Sharma had just launched her childcare-on-demand startup, Easel, in Boston when the pandemic forced the startup to stop operating. “I followed one of the most useful pieces of advice I’ve gotten in life: Never lie to yourself,” she said. “I realized Covid-19 had fundamentally changed the basis on which my startup was conceived, and I wasn’t passionate about the ‘new’ problem that would emerge post-Covid.”
“The moment I told myself the truth, the decision to wind down—although emotionally excruciating—was clear and I was ready to move on.” Sharma recently started as Rippling’s head of people.
Sachin Bhat was hired as an engineering lead last year when his startup, Scribe, hit a wall. “We had dug ourselves down into a heavily crowded workflow automation space and were too burnt out to find a path out of it,” he explains. “It was a very tough decision, one that I deliberated on for months. My advice is this: Don’t romanticize entrepreneurship. Failure goes with the territory.”
It’s ok to mourn
Rishab Hegde, founder of YC-backed Trestle, describes the mix of emotions and fears he felt when he shut down his startup in June. “Shutting down was difficult in many ways: I worried about what my customers, investors, and peers would think of me. I worried if I would get a chance to try again in the future. For months during and after winding down, my self-confidence plummeted.”
He soon discovered his fears were unfounded. “In the end, my investors and friends were extremely supportive, my customers understanding, and over time I realized that I had learned a massive amount from the experience, and I would do significantly better next time.”
Hegde’s advice to founders? Give yourself permission to mourn the loss of something you cared deeply about. If possible, take some time to refresh and reboot before jumping into your next role.
Lean on your network
When Dilanka Dharmasena closed his startup in July, he discovered that “[a]waiting every unsuccessful founder is the blurry void of ‘after the startup’ that no one thinks about. After winding down Sustral, I began searching for my next challenge by reaching out to contacts I had previously spoken with before deciding to go out on my own. You’d be amazed at how open people are to helping virtual strangers.”
As head of HR now for Rippling, itself a high-growth startup, Sharma tells former founders to treat their experience like the asset it is. “Startup founding experience teaches you a great deal of life—this experience is invaluable. Consider yourself fortunate and use this experience as your strength. There are plenty of companies that will value your grit, expertise, and drive.”
There are many paths to glory
Most startups fail, but there’s enormous pressure on founders to keep grinding it out even when there’s little hope of recovery. Tony Dong, who was in the same Y Combinator class as Hegde for his startup PerShop, reminds entrepreneurs that the path to success is rarely linear, and there are many career experiences that would help them along the way. You don’t need a founder title to have impact.
“My advice is to consider their careers holistically,” he says. “The nonlinearity of careers in tech/startups means that you are often in control of how you grow. So optimize for opportunities to learn from the best people and push yourself to grow in the fastest way possible.”
For Dong, being an engineering manager at Rippling means “I can be an entrepreneur and ride an already running train.”
But it’s a tricky balance, finding a role within a more established company that is both a good fit and a challenge. Dharmasena recalls being worried that the skills he’d developed as an entrepreneur would atrophy at most companies. “My greatest fear was that my well-worn product and design hats would gather dust in an engineering role,” he says. “I looked for a role where I could continue to wear those hats, on a team of startup veterans and former founders who understood my experience.”
You can always try again
It’s trite but true: Failure doesn’t matter nearly as much as how you respond to it. Most of our founders, like Hegde, say they plan to try again one day.
“Founding a successful company has always been a goal of mine and something that I still plan to do at some point in the future,” he explains. “Part of my decision to shut down Trestle was the realization that I would be setting myself up for a greater chance of future success by joining a high-growth company where I could continue to hone my founder skills while still having mentorship, support, and working on a product that had already achieved product-market fit.”
Jeremy Henrickson is VP of product and engineering at Rippling and the former chief product officer at Coinbase.