Epilogue of a Startup
Posted on May 12, 2013
After our fearless Start-up has failed in the most lamentable manner, I wondered: What went wrong and what could I change in the sequence of events to avoid the failure? Bankruptcy has occurred so suddenly that many employees have not recovered from the shock even after months. Everyone has been felt cheated… the big shock was when management declared the reason of bankruptcy: “[suddenly] we realized the money were gone…”
Of course no one believed the story with “there are no money“… Many employees have come to me to ask me: Why are we bankrupt? But at that time I was so stunned by the news of closing, I couldn’t give any answer… Here came the time to answer this question, on the one hand, I had the moral responsibility to the team I led, on the other hand I want to bring a bit of light in the short story of our Startup.
Do shareholders have been so naive and foolish, so they have let the company in the hands of incompetent managers, who have poorly managed the budget and they have been totally misinformed about how the money were spent? Was there ever a budget plan for our company?
The lack of a budget plan looks crazy, but not impossible (there are companies that operates without a budget plan or a poor plan without realizing there is a problem until it’s too late) . When the company was founded, I was present at the signing of the F-Startup budget. It is true, there was a so-called “budget plan ” and I participated in its design, but the final form CEO submited to shareholders surprised me: a budget plan done in Excel with a few graphics and rough estimates, without any mention of how the budget will be monitor and control, without any performance indicator or any communication or reporting plan, but contained the amount of money we needed to support the company’s expenses for about a year and a half. The shareholders, perhaps blinded by the idea of the project that can enrich anyone with a relatively small investment, have ignored all these deficiencies of the budget plan and have approved the investment.
So theoretically we had an approved budget, and even it was done based on a poor plan, it was generous enough to cover all operating costs for a long time. If budget plan was not due to bankruptcy, then that was the reason? The only plausible explanation is the shareholders have stopped investing because of distrust in management. Like in the bankruptcy case of the parent company, when shareholders realized the organization was involved in a series of dubious and nonperforming contracts, they have decided to stop investments. Investments did not ceased instantly. First, the shareholders warned executives about financial problems, then they asked to terminate the contracts with external service providers, then they imposed employees dismissal and ultimately announced bankruptcy. Despite the pressure they put on optimizing a cost shareholders, the executives have not given up, until very late, the contracts with external service providers.
It was more than obvious we could terminate, without any risk, the contract with external consultants, because our work could have been done only with internal staff. For example, my supervisor has refused giving up the contract with IT consultants. At the end of each month, I was seeing reports and huge invoices to the third party contracts sent to Accounting. I hesitated to raise the problem of unnecessary costs to shareholders, primarily because I have not had the courage to overstep my authority and secondly because I have never thought the shareholders have no idea what happens to their money. Furthermore I could not conceive they might be totally disinterested about company budget (although in the last months, I should have think something was wrong as they kept avoiding our office and lead the company remotely by phone). If the contracts with external parties would have been terminated in time, I think with the cost saving, we could have survived at least half a year, enough time maybe to make money from our products and become profitable.
The news of closing the company I believe has shocked everyone, including CEO. Above all, just before our contracts finished, we were informed we will not receive any wages. The news angered all employees who were now not only in a position to remain without a job, but without getting any compensation for last month. Originally, we all had the intention to sue the company, but eventually we gave up the idea and we continued our lives.
Although employees knew, long before bankruptcy, about the company’s financial problems, they continued to work with the same enthusiasm and dedication as at beginning. At the end of our journey, when we broke up, we were wistful for the work we had left behind and for the beautiful memories of a great and united family.
F-Startup failure taught me a few things:
- To succeed in a Start-up is not only necessary to have good ideas, but you need people to support good ideas. A Start-up can succeed only if the entire organization has a vision and a consensus of ideas.
- A start-up cannot be conducted effectively by managers from large corporations. A corporate mindset says: “working when necessary and things are going for themselves” , but in a start-up is always needed to do more than necessary.
- As a professional, only in a start-up you can see what your true value is. A start-up is a challenge for everyone regardless the level or experience.
- In a start-up, every expense must have a business case: If you invest, you must have a plan showing how you will recover your investment.
- In a start-up, every effort must be justified: Why is this effort needed?
- Start-up is for people who take risks. By taking risks, you become brave. A start-up can make you fearless!
- In a start-up you have the chance to live every moment: Every day you can go from agony to ecstasy! (Mahatma Gandhi once said: Live as you were to die tomorrow, Learn as you were to live forever.)
A new beginning
When I started writing this journal, I wanted to document every thought, every emotion experienced during my adventure in F-Startup. As I was writing the diary, I realized that the diary notes might help me to write a series of articles dedicated product and project management would be useful to those who want to try the experience of a start-up. From here came the idea of the concept by Lead by Experimenting which basically means to become a better manager your using your own experiences.
Despite the failure, F-Startup was for me the ultimate challenge professionally. I have worked in large corporations, but also in smaller companies and I have never thought it can be so hard to face the challenges of a Start-up. This experience gave me the chance to exceed my limits and become a more creative person.
If I would have the chance to repeat the experience of a F-Startup, I’d do it again! [End]
Recommendation: Lead by Experimenting.