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STARTUP

Are You Running a Zombie Start-up?

Y Combinator grad Referly may have been racking up active users, but here's how its co-founder Danielle Morrill decided it was a zombie start-up anyway.

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Entrepreneurs pride themselves on the fact that they never say die.

But when does tenacity turn into an unwillingness to face facts?

Deciding when to raise the white flag is among the most personally painful decisions a founder can face, which makes Danielle Morrill's recent blog post explaining why she's stepping away from the original idea for her start-up Referly to do a top-to-bottom rethink all the more impressive.

Along with her explanation for shuttering Referly in its original incarnation, Morrill runs through her thinking on this difficult question and offers some guidance that might help other entrepreneurs who are considering closing down a business that, while not exactly totally without customers or growth, is still in a state of suspended animation.   

"The biggest reason to charge ahead is that I don’t want to waste a single moment of my life in denial, in deadlock, in zombie mode waiting for something I can’t control change or expecting magic to happen. It goes beyond not wanting to. I simply can’t, won’t, would never give up precious days, weeks, months, years," she writes. The more technical explanation: while she was racking up active users, revenue wasn't climbing with her original business model.

You might have other key metrics for your business, but that doesn't stop Morrill from offering some questions that can help any entrepreneur decide whether their baby has sadly turned into a zombie (cue the theme song from The Walking Dead while you read):

  • You don’t want to get out of bed in the morning
  • You don’t want to go out in public for fear you’ll have to explain what you do
  • You haven’t hit 10 percent week-over-week growth on any meaningful metric (revenue, active users, etc)
  • You’re working on the same idea after 12+ months and still haven’t launched
  • You’ve launched a consumer service and have less than 2 percent week-over-week growth in signups
  • You’ve launched an enterprise service and have less than 2 percent week-over-week growth in revenue pipeline
  • You are the CEO and hole yourself up in the offices so you don’t have to talk to employees and can read TechCrunch
  • You’ve hired consultants to figure out revenue, culture, or product in a company of less than 10 people
  • You’re at SXSW right now reading this post and trying not to cry

If that list made for depressing reading, know that at least you're not alone in facing a tough battle to take your start-up to the next stage. With series-A funding tight, many start-ups are having to make tough decisions right now. There's even a new start-up called Exitround to help teams who want to be quietly considered for an acquihire (Inc. has tips on how to do this right if you're thinking of selling).

Check out the rest of Morrill's frank post here.

Are there any signs you might be running a zombie start-up?

 

IMAGE: Flickr photo courtesy of Mark Lobo
Last updated: Mar 13, 2013

JESSICA STILLMAN is a freelance writer based in London with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist.
@EntryLevelRebel




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