What's the emotional cost a founder pays when the startup shuts down?
Social messaging groups were recently abuzz that social ecommerce startup Wooplr had shut shop. Then came confirmation of the same – the screenshot of a mail sent by the startup’s finance team to customers. The mail read: “Due to unforeseen circumstances, we have had to temporarily shut down our operations. Hence, request you to support us in this difficult time. We are trying our best to resolve any pending payments over the course of the next few months. We will send you an update over the course of time.”
Backed by Sistema Asia Fund, Astarc Ventures, and Helion Venture Partners, Wooplr became the latest casualty in the Indian startup space. No wonder, it again brought up conversations around startups and failure. What went wrong and why?
Like one startup founder said on condition of anonymity,
“When we shut shop, it was the talk of the town. Everyone had an opinion of what we had done wrong and where all we had messed up. Everyone seemed to know better than us on what was going wrong - how badly we had managed funds, how our business model was doomed from day one. It was my personal hell, where I was burning every single day.”
Failure is part of the drill
Successful startup founders achieve hero status. They are quoted and awarded, and become inspirations for aspiring entrepreneurs. But for every one such founder, there are many others who have failed – some in the initial stages of operations, others after seeing some measure of success.
According to a report by the IBM Institute for Business Value and Oxford Economics, close to 90 percent of startups fail within the first five years. Despite the high chance of failure, there is woefully little spoken about failures in the startup ecosystem.
“There is this sense of deep loss, like something has died. It possibly is like bereavement, where the helplessness, anger and every step are counted and recounted multiple times. You keep going back and thinking of everything that could’ve been, or maybe what you should’ve done better. The pain is inexplicable,” says a founder on his startup failing.
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“You are expected to win. Everyone bets on you, believing that you are going to win and win against all odds. And failing just isn’t an option. And the times you do falter, the scrutiny seems unbearable,” says a startup mentor and investor on the condition of anonymity.
The solution here, say many, is to seek close people who one can talk to. In India, talking about failures is almost taboo, but now, that narrative is changing, and more and more people are open to actually talk about failure in constructive ways. “There is a strong stigma associated with it (failure), which in turn puts immense mental strain on the founder,” says the mentor.
Anna Chandy, psychologist and Chairperson of The Live Love Laugh Foundation, says, “Nobody talks about the journey of failures and how it is normal. We need to start accounting for those as well in all the stories we write and talk about.”
Facing the storm
Anna explains failure often impacts one’s self worth, and failed entrepreneurs soon start experiencing a heightened sense of inadequacy. “A founder often ends up putting most of their time into building the venture. Most times, their relationships with spouses, partners or even close-friends end up on the back burner. It, therefore, is important that founders find a balance and even have a support system. And not just to deal with failures, but even to deal with everyday stress that ends up being a part of the job,” she adds.
There are also plenty of founders ready to talk about their failures, and have others learn from their experiences. K Vaitheeswaran is one of them. The founder of India’s first ecommerce startup, Indiaplaza, documented his journey in the book Failing to Succeed: the story of India’s first ecommerce company.
After the initial success with Indiaplaza, Vaitheeswaran says shutting down was painful. He says,
“For the investors, I was just another item in their portfolio they had already moved on from. All my so-called 'friends' - investors, relatives, well-wishers, and anyone I knew - were all suddenly unreachable, travelling or busy."
“The creditors were relentless and restless, calling me for dues the company owed them,” he recalls. “Everything is hunky dory till things go wrong, and then a mess created by several people becomes the entrepreneur's sole responsibility. People I knew well and trusted, distanced themselves. It was like I had contracted a communicable disease. And these were people who could have helped if they had chosen to," he adds.
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Everyone has their crosses to bear
Another founder says life at a startup was about being high strung all the time. “It’s about going from extreme highs of funding, the euphoria, talk of higher valuations and deals, to suddenly becoming a blip that everyone wants to remove. It is a crashing feeling that just cannot be explained. The people who once loved and praised you are nowhere near you and you are suddenly all alone taking the burden of that failure.”
And this burden, many psychologists say, can lead to anxiety, alienation, and even depression.
A support system, in such cases helps. Be it at home, or a group of close friends. Anna says a founder should seek support from people they know who will be supportive and non-judgmental. “You need someone with you, who has been there and done that. A sort of go-to person who can be objective and give you right direction,” says Anna.
It is also important to take a pause, take some time off to process what happened, and understand what went wrong. And maybe that might just give one the courage to brush off the dust, and stand up to start up again.
And to Wooplr’s Praveen Rajaretnam, Ankit Sabharwal, Soumen Sarkar, and Arjun Zacharia, there is always life beyond the shutdown of a startup.