Discuss: How to tell your employees that you’re shutting down your startup

Photo credit: Tim Mossholder

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You look in the proverbial mirror and realize that you’ve finally struck out. Your startup has failed. While that’s difficult in and of itself, what’s even harder is breaking the news to your staff (read: family).

What should you do? We asked two founders to share their experience.

Editor’s note: Answers have been edited for clarity.

Alexander Jarvis, founder of Perfect Pitch Deck

The story I’m sharing here is of the time when I hired a company’s employees only hours after it was shut down. While this is not the norm, it’s an example of what a dedicated founder can achieve to “do right” by their staff.

The story

It was Sunday night in Sydney when I got a message from a friend on Facebook. “Dude, can I call you?” he said. “Need to chat ASAP.” I said OK, and he promptly called me. “I have to shut down Wimdu tomorrow and fire everyone,” he continued. “Can you take them all?”

We discussed a bit on what transpired over the last few months. It seems their budget got tighter over time, and he had to progressively let people go to stay within it.

Since I wasn’t going to do anything complicated, we figured out a deal. What followed was some horse trading, wherein I agreed to buy all the assets of Wimdu Australia and interview the entire team that was left.

The next day, my friend called everyone into a room and announced:

Let’s discuss