How To Shut Down A Start-Up When It Doesn't Stack Up
LULU GARCIA-NAVARRO, HOST:
Let's say you have an idea for a startup. You can probably guess what comes next - lots of brainstorming, whiteboards, asking for money - begging for money - then launching your product and, hopefully, making a big splash. But what happens when your startup doesn't kick into gear? How do you shut it down? Abigail Edgecliffe-Johnson is trying to answer that question in part because she might need that advice herself. She joins us now from our studios in New York to explain.
ABIGAIL EDGECLIFFE-JOHNSON: Hello. Thank you so much for having me.
GARCIA-NAVARRO: We'll get to the project you're calling the shut down in a moment. But I want to begin by talking about the startup you founded and run. It's called RaceYa. Tell us...
GARCIA-NAVARRO: ...About it.
EDGECLIFFE-JOHNSON: So RaceYa is customizable toy cars that help kids learn about science and engineering. And the idea was to create a physical product that kids could use to play and then learn while playing. And then from there, we had a whole, you know, big, hairy, audacious goal, as they call it, to build out, you know, a community and, you know, online apps and all sorts of fun stuff that you have to think about when you build a startup. But because we are building hardware, it's much more expensive. It's very, very cost intensive to actually make a physical thing. And we've figured out that we probably can't go it alone, which, I think, probably, a lot of startups discover as they run through their journey.
GARCIA-NAVARRO: Yeah. So you founded RaceYa in 2014. But a few years later, you started a Kickstarter to raise money. And you found yourself at a crossroads.
EDGECLIFFE-JOHNSON: Exactly, so we were trying to raise enough money to make a thousand units. So when we went on to Kickstarter, we had to have a fairly high price point to be able to cover the cost of production. And we realized that we weren't going to hit our goal, which is upsetting and embarrassing and painful. But it was also a really clear signal to say, OK. You've tried every which way to do this on your own and to raise money. And it's not going to happen the way you thought it was going to happen.
GARCIA-NAVARRO: Which brings us to this idea of shutting down a startup, which is what, I understand, you're considering right now.
EDGECLIFFE-JOHNSON: We are. We're actually looking at multiple different options, but shutting down is certainly one thing that we have to consider. And as I started looking into what that would be and what that would look like and how that would happen, I realized that it's kind of a mystery because lots of people have talked about shutting down their companies. But usually, they only talk about it on the other side, right? Once they've passed through the pain and the misery and the embarrassment, then they come out the other side and say, I failed. But now I'm doing this amazing thing.
EDGECLIFFE-JOHNSON: And we love that story, right? Everybody loves the redemption story. But when you're actually in the middle of it, it's like you're a leper. Nobody wants to come anywhere near you because they think the failure is contagious. And so you suddenly find yourself completely isolated.
GARCIA-NAVARRO: And so you've asked the Internet for help. You set up a Twitter account and a Google form, asking people who have had to shutter their startup for help because, as you describe it, there are approximately eleventy (ph) billion resources for building a startup. There are practically none for shutting one down. And what kind of responses have you been getting?
EDGECLIFFE-JOHNSON: It's been really amazing and impressive. And also, it feels really cathartic because what you realize when you start asking the question out loud is how many people have had to go through this and how painful it was for them. And the things that people have found to be the most helpful is talking to other people who have been through it about the real detailed information. People have asked repeatedly for - I wish I'd had more help valuing my assets. I wish I'd had more help talking to my shareholders. I wish I'd had more help, you know, communicating this whole thing and knowing if I was supposed to file for bankruptcy or not. But even that costs money, so the shutdown is, hopefully, kind of going to be like the decelerator as an adjunct to all the accelerators that are out there for startups.
GARCIA-NAVARRO: So what do you hope to do with all this advice once you've gathered it? Could this be a new startup?
EDGECLIFFE-JOHNSON: No. Please, no.
EDGECLIFFE-JOHNSON: No, what I would love is to make as much of this information as publicly available as possible. A couple of people have written about this, but it's - there's no sort of single space to find this. There's no one that's kind of owned the brand, if you will, of shutting down because it's embarrassing, and it's painful. And you think, oh, I don't want to be the face of failure. So I'm kind of saying, sure. Fine. I'll do it. I'll be the face of failure. That'll be me. And, you know, I want to be able to make this a little less painful because if we make it less painful for startups to shut down, then those founders are going to have a little bit more kind of left to go out and build the next thing or do the next thing, which is what we want for the U.S. economy, right? We want entrepreneurs. We want people building businesses. We don't want them crushed by their first failure.
GARCIA-NAVARRO: Abigail Edgecliffe-Johnson is the founder of RaceYa and the creator of the shutdown.
Thank you so much.
EDGECLIFFE-JOHNSON: Thank you very much.
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