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Dalton Caldwell explains how to decide if you should shut down your startup or keep going

Dalton shares the following insight from his time at Y Combinator:

“If you look at all the startups we’ve funded at YC, the underlying theme is that rationally the founders should have given up at some point… You likely have to go through this many times and have these near death experiences. Then you get lucky and you look like an overnight success… This is one of those things that the longer I’ve had this job, the more I really believe this is true.”

However sometimes it does make sense to shut down your startup. Dalton’s heuristic for this is to ask yourself the following question: are you having fun?

“Do you still enjoy doing what you’re doing? Do you enjoy spending time with your cofounders? And if the answer is yes, I would tend to lean toward keep going. And if it’s more: ‘wow, this is actually profoundly affecting me in a negative way… And I don’t really want to work with my cofounder anymore’, and things like that. Then I would lean toward probably don’t do it anymore.”

Dalton points out that most founders who do persist through the trough of sorrow love their customers and love their product.

He gives Airbnb as an example:

“They probably should’ve shut down like 3 or 4 times before they got into YC. It objectively wasn’t working. They were basically ruining their lives. They were disappointing there parents. Everything was wrong. It was a purely irrational act for the founders of Airbnb to keep working on their goofy startup… [Yet] they really liked Airbnb. And they liked working with each other. And they liked the first hosts that they met, and they knew all their names. They loved their startup even thought it was going bad. And to me, that’s a signal to keep going—that you really, really love what what you’re doing and the people you’re doing it with and you love your customers and you love the problem.”

Dalton also emphasizes that it’s not the end of the world if you shut down your startup:

“As long as you have integrity, you’re an honest person, and handle yourself well through good times and bad, people will remember you fondly. We have such a short life. There’s only so many years we get in our careers. Doing something that makes you miserable and the only reason you’re doing it is to avoid losing face when your heart says it’s not going to work—that seems like a pretty big opportunity cost on literally your life.”