Brutal Startup Failure
The author reflects on their failed crypto startup, citing foundational mistakes, a dysfunctional co-founder relationship, and legal battles, ultimately leading to resignation, closure, and no financial gain.
The author reflects on the failure of their venture-backed startup in the crypto space, which lasted three years. They acknowledge several foundational mistakes, including selling 40% of the company for $1.2 million and entering a predatory shareholder agreement. Initially, the startup showed promise after joining a well-known accelerator, but tensions with a co-founder escalated. The author felt overwhelmed by responsibilities while the co-founder underperformed, leading to a legal battle after revoking the co-founder's powers. The author realized too late the long-term implications of their partnership, as the co-founder owned 30% of the company and was uncooperative. Despite reaching break-even, the stress and harassment from the co-founder took a toll on the author's mental health. After failed negotiations to buy out the co-founder, the author resigned, leading to the company's closure and the firing of ten employees. The co-founder is now suing the investor, while the author is left with nothing but legal fees. The author emphasizes the importance of establishing a solid foundation and the challenges of changing it later.
- The startup faced foundational errors, including a predatory shareholder agreement and a dysfunctional co-founder relationship.
- A legal battle ensued after the author revoked the co-founder's powers due to underperformance.
- Despite achieving break-even, the co-founder's harassment led to the author's resignation and the company's closure.
- The author highlights the importance of a strong foundation and the difficulty of making changes later in a startup's life.
- The co-founder is now suing the investor, while the author walks away with no financial gain.
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16 comments(and product market fit is a necessary condition, but unfair advantage is where it is at)
When this happens, you have to invert the offer and say that he can pay you that amount for you to leave instead.
It's also why I am incredibly hesitant to have a co-founder and it's why I went the bootstrapped approach instead of VC funding from the start.
cofounder arguments are common, esp in crypto. for your next venture, it's better to have a cofounder agreement with vesting schedule in place. once someone becomes irrational and unreasonable, it's a sign to get lawyers involved.
dont be too hard on yourself, happens to the best of us.
Granted I've only got started on this journey a few months ago, but I tried to find a co-founder and failed 3 times to find someone who I can trust and is capable. I think I'm just going to do it myself because counting on someone else at this stage while giving up significant equity to a bozo is a recipe for disaster.
it's hard and brutal especially for first-time cofounders, but it's part of the process
And do you have thoughts on how next time you'd go about picking one differently?