Should You Stop Working on Your Startup?

This is the toughest question founders face, and given the current funding environment, I'm being asked it a lot.

When I was a founder, I never had a good way to think about it. Due to sunk cost fallacy and survivorship bias, answering it for yourself is both emotional and intellectual.

Now that I primarily work with founders rather than being one myself, I have a clearer way to think about it.

If you're considering whether to stop working on your startup, follow this decision tree.

1. Am I growing quickly?
2. If not, am I learning quickly?
3. If not, do I have ideas for promising experiments?
4. If not, do I still have conviction?
5. If not, stop working on your startup

If the answer is yes to any of these questions, continue working on your startup but focus on the step mentioned above.

Let's go through each in detail.

1. Growth

If you're growing quickly, keep working on your startup. There's a saying in sports that "winning cures everything." For startups, it's growth. But if you're growing quickly, you're probably not asking this question.

A quick note on how fast is fast. It depends on the stage, but for our program (and YC), the target is 5% to 7% weekly growth (not cumulative). If you're very early, grow faster. If you're later stage, you will probably grow slower.

2. Learning

If you're not growing quickly but you're learning quickly, keep working on your startup.

Typically, the learnings you're looking for are...

1. Target Users – What specific group of users (job industry, company size, etc.) strongly experience the problem you're solving?
2. Value Proposition – For that narrow set of users, what do they care about (saving $, making more $, etc.)?
3. Channel – For that narrow set of users, how do you reach them (e-mail, associations, etc.)?

If you're learning about your users quickly and turning those learnings into growth exploits, you should start growing quickly soon.

3. Experiments

If you're not growing or learning quickly but have many experiment ideas, keep working on your startup.

Promising experiments are typically...

1. Specific to Your Startup – They should be experiments uniquely relevant to your startup, resulting from an observation or insight about your users or product usage.
2. Narrowly Focused – You won't learn much from "Launch on Product Hunt" but from "Cold outreach to 20 accountants at firms with 5 to 20 employees on cost savings."
3. Well-Formed – Promising experiments consist of an action, expected outcome, and insight (often the hypothesis). They validate a hypothesis. A useful test for a well-formed experiment is to express it as "if we do [action] then [expected outcome] because [insight]."

Action generates information. If you have promising experiment ideas that will generate learnings leading to growth.

4. Conviction

If you're not growing, learning quickly, and short on promising experiment ideas, ask yourself if you still believe in what you're doing.

This is a challenging question because emotions and biases (sunk cost fallacy, confirmation bias, etc.) cloud your judgment.

To counteract this, I recommend a thought exercise. Imagine starting a new company and picking a problem to work on. Given what you know now and other problems, would you choose the problem you're currently working on?

If yes, I'd consider whether you're being honest with yourself.

If the answer is no, I'd sit with that for a few days. For every startup I've worked on, even the successful ones, my answer has been yes. It's normal and natural. As a founder, you'll go through periods of doubt about your startup for various reasons.

But when that feeling persists for months, take it seriously.

5. Stop Working on Your Startup

If you stop working on your startup, you have decided to (1) work on a new problem or (2) stop completely.

If it's (1), the journey continues and I hope you find renewed energy and conviction from working on something new.

If it's (2), I'd like to mention a few things.

1. Obligation – If you have investors, you might feel like you've let them down. You haven't. When Iterative invests in a founder, we expect good faith effort into your startup. You can't guarantee success, and we know that.
2. Failure – You might feel like a failure. Welcome to the club of everyone who's tried something new. I'll teach you the secret handshake next time I see you.
3. Rest – Take time off. The biggest mistake founders make after shutting down their startup is to start another one immediately. As a founder, the only time you really get to rest is in between startups, so please do it. The world will always have problems for you to solve. It needs you at your best.

When you’re ready, you should apply to Iterative. We like founders who have failed before. As I often say, the best advice for first-time founders is to be a second-time founder.