No More Hustleporn: When You Should Shut Down Your Startup

Tweet by Elizabeth Yin

GP @hustlefundvc. Democratizing wealth via entrepreneurship. Entrepreneur-investor. SF Bay Area native. Sign up for my email newsletter at

Today's thread is on what to do when you think your company needs to shut down.

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1) The 1st q to ask yourself is if you really do want to shut down your co?

Sometimes ppl think they need to shut down their co, but really they just need a long break from it.

Shutting down is a big decision that should be made w clarity of thought - not w stress or emotions.

2) I talked about that a bit last night:

People often make such a big decision when the momentum is just getting going, because they are burned out.

Take a long break before making such a decision.

3) In addition, there's a difference between shutting down and YOU not working on the biz right now. Ppl don't often realize the latter is a choice.

4) And often there are alternatives that ppl don't consider.

Such as this story of my friends who thought about shutting down their startup but then did something clever:

5) Last yr during the pandemic, some of our portfolio companies were hit hard. Many founders thought about shutting down. I posed this same q to them.

And some ppl decided to get jobs and wait out the pandemic and come back later.

6) Hindsight is always 20-20 but those who are still operating in this market are glad that they didn't shut down last year.

Sometimes just waiting things out and getting a job / contract gig elsewhere for a few months makes all the difference.

7) But let's say you've looked at all the possibilities and have decided to shut down.

What should you do?

At the heart of it, the best way to win over ppl is to do right by them. Do right by your customers, partners, employees, and investors.

8) Certainly, you / they will be disappointed, but at the end of the day, all of these ppl just want to know if you have *their interests at heart* through this shut-down process.

9) This logically makes sense, but what I often see is very different.

You see teams do things like:
-tell everyone in the 11th hr right before the shut down
-or just completely ghost from telling ppl altogether

10) Instead, just own it.

Shutting down a company is not a bad thing. Everyone who signs up to work with a startup in any capacity knows that shutting down is a very likely outcome.

11) And if you can own it and give ppl a head's up ahead of time, and to the extent possible help all these parties, not only will ppl really support you in the shut down, but they will want to work w you again

12) This can mean helping your employees land well at another company.

It can mean helping to recoup as many $$ as possible for your investors with an asset sale.

It can mean making sure partners have an alternative to you.

13) It won't be perfect. But ppl just want to know that you tried hard for them and were transparent and open with them. And that's about all that you can do.

But often founders are too embarrassed to do this.

14) Lastly, I want to emphasize, YOU are not your co. You will have many at-bats in your career if you choose.

If an idea didn't work out, YOU are not a failure. You can't force the market to work for you.

So if you shut down, get yourself in good shape & get back at it later.