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Shutting Down

December 04, 20132 min read

Photo by Randy Jacob on Unsplash

Most of us view shutting down a project or a venture as something negative. As a human race, we are culturally and psychologically conditioned to favor creating new things and having progress. Closing down business, portrayed to our mind as destructive and counter-productive, is naturally a topic seldom broadcasted by failed entrepreneurs.

However, having gone through not just once or twice, but thrice the experience of shutting down a venture, I have started to see things in a different light – I think we ought to celebrate shutting down a startup as much as we celebrate the launch of a new business. Startups are essentially temporary market hypothesis testing vehicles, and the end of every startup, when done right, means the entrepreneur has heard the signal of the market and found the result of the market experiment – whether the signal is positive (meaning the startup will morph to become a proper business) or negative (meaning society as a whole will reallocate the resources which was previously used inefficiently), the entrepreneur has learned valuable information and our society as a whole improves in allocative efficiency.

To a certain extent, this reminds me of the term “Creative Destruction” by Austrian economist Joseph Schumpeter – although in this case, discontinuing a startup is not exactly destroying an old economic order. The semblance strikes me because in the case of startup, every “destruction” paths way for new creation, through evolvement of better-fit business and general refocusing of resources to potentially more productive use.

The least desirable situation is to be stuck in a startup with prolonged dismal traction yet not having the courage to shut down and give yourself a new opportunity.

Here’s an elegantly written post-mortem of Outbox by its founders. Well worth a read on their wild journey of disrupting big old industry and trying to fix huge messy problem.

Insane idea, but classy adventure nonetheless.

Interesting to note how quickly they realized when to throw in the towel and moved on to refocus their resources on a new problem.

Here’s a paragraph I enjoyed:

For startups, it’s difficult to know when to throw in the towel. Indeed, the main strategy for most of the life of a startup is overcoming impossible odds, and we built a team that did that over and over again.

This final challenge—product market fit—is one we ran after with characteristic zeal. Amidst these struggles we were reminded of the serenity prayer written by one of our favorite authors, Reinhold Niebuhr:

Grant me the serenity to accept the things I cannot change,
The courage to change the things I can,
And wisdom to know the difference.

Facing situation after situation we kept the courage to change them; in these final few months, we were granted the serenity to know this situation is one we cannot change.



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