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Dalton Caldwell's Rule for When to Kill Your Startup

By Dalton Caldwell · Startup Growth · 2 min read

Airbnb should have died four times. Here is how to know if you should keep going.

Key Points

Every great YC company had a moment where the founders should have rationally quit.
The signal to keep going: you love your customers, your co-founder, and the problem.
The signal to quit: you are only staying to avoid losing face.
Nobody will remember you shut down. They will remember if you had integrity.

The only reason you're doing it is to avoid losing face, and when your heart is not in it — that seems like a pretty big opportunity cost on literally your life.

Every Great Startup Almost Died

Caldwell: If you look at all the startup stories we have at YC and all the companies we funded over all the years, the underlying theme is that rationally the founders should have given up at some point.

Airbnb should have shut down three or four times before they got into YC. It was not working. The founders were ruining their lives. Their parents were disappointed. Continuing was a purely irrational act.

"It was a purely irrational act for the founders of Airbnb to keep working on their goofy startup."

The Overnight Success Lie

Caldwell says this pattern repeats across the entire YC portfolio. There has to be an irrational intention to keep going. You will feel defeated. You will have near-death experiences. Multiple times.

Then you get lucky. Then you look like an overnight success. The longer Caldwell does this job, the more he believes this is true.

"You likely have to go through this many times and have these near-death experiences. And then you get lucky. And then you look like an overnight success."

The One Question That Matters

So how do you know when to quit versus when to push through? Caldwell boils it down to one question. Are you still having fun?

Do you enjoy spending time with your co-founders? Do you love your customers? Do you love the problem? If yes, keep going. The Airbnb founders loved their first hosts. They knew all their names. They loved the product even when it was failing.

"Are you still having fun? Do you still enjoy doing what you're doing? Do you enjoy spending time with your co-founders? If the answer is yes, I would tend to lean on the keep going."

The Signal to Quit

The flip side is just as clear. If the startup is destroying your relationships, if you dread working with your co-founder, if you could not care less about the customers — stop.

Caldwell says the real danger is staying for one reason only: to avoid losing face.

"The only reason you're doing it is to avoid losing face, and when your heart is not in it — that seems like a pretty big opportunity cost on literally your life."

Nobody Will Remember

Here is the part most founders need to hear. Nobody will remember that you shut down your company. Not in 10 years. Not in 20.

As long as you have integrity. As long as you handle yourself well through good times and bad. People will remember you fondly. Life is short. Spending it on something that makes you miserable is the real failure.

"No one will remember that you shut down your company probably in 10 years or 20 years. As long as you have integrity, as long as you handle yourself well, people will remember you fondly."