Entrepreneur 2 Entrepreneur: Dan Linstroth on stopping

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Dan LinstrothThank you to Split Rock Partners  for underwriting the Entrepreneur 2 Entrepreneur series.

Minnesota tech entrepreneur Dan Linstroth was a co-founder and CMO at Heroic, a B2C startup that launched in 2011 and raised angel funding, yet has shut down as of late.

Why did Heroic decide to stop?

The answer is simple: we ran out of money and were faced with some options to either bootstrap/grind or try to raise more money.  Each circumstance requires full energy, enthusiasm and no hesitation about what to do. We had been working Heroic it for a few years already and became a bit burned-out so we had to be honest about where we were mentally and emotionally with the project.

Split Rock Partners

What was that decision process like considering you had other partners and investors?

We had extensive conversations and explored all options. We had a good working relationship as a team so we were able to communicate openly about how we were feeling.  One of the important things is that having a unified collective vision in a startup is critically important. Perhaps we each saw and wanted different things.   Combine that with were we were financially and we came to a conclusion on good terms, but without question, a very difficult conversation to have and a tough decision to reach.

The fork in the road that defines an entrepreneur is actually starting vs. talking about starting, right? There’s a similar fork in the road when you get to that point in the biz to contemplate shutting down.

Our investors and financial stakeholders were okay with the decision. They supported us from the beginning and continue to be close mentors. I am forever grateful for their support. The hardest part of decision to close was not living up to the expectations we set for ourselves and those who backed us. The investment team we had was supportive of us from the beginning through the end. They were familiar with invest and understood the risks.

What’s some lessons learned in retrospect?

There are a lot, right!?  The first thing was the importance of action.  We had an idea and the energy to start so we did, no regrets there and would (will?) do it again I’m sure.   Failure can be your friend, not enemy, the value of action was huge.

A more tactical lesson learned was about focus…time and energy must be used wisely as a startup. Choose an identity as a company and focus on providing something of great value for your customers. What is your company going to do better than anybody else? Also, embrace being small and don’t be afraid to grow slowly at the beginning

What is something you would do differently next time?

There are two things I would do differently. One: focus on getting to revenue, that is, what are customers actually willing to pay for?  Two: remove the focus of raising money at an early stage. 100% of the teams focus in the beginning should be on customer discovery.

In fact, not having money in the early stage can be a strength because it forces you to only spend time on things that are absolutely vital to launch, validation, and revenue.  Raising money should be a demonstration of value to the market and a consequence to success.

What’s next for you?

Right now I’m doing new business development and strategy at Spyder Trap in Minneapolis, which is in line with what I’ve learned about digital marketing while at Heroic.   I also started a craft coffee project called  Kindly Coffee which keeps me in the entrepreneurial world.

Related Minnesota tech news:

Entrepreneur 2 Entrepreneur: Matt Bauer on ending [Part 1]
Entrepreneur 2 Entrepreneur: Matt Bauer on ending [Part 2]
Entrepreneur 2 Entrepreneur: Matt Bauer on ending [Part 3]

Comments

  • http://twitter.com/casey__allen Casey Allen

    These founders will all be back in the game before long. As they should.

    Solid post, Dan, and many thanks for laying it out there for all other entrepreneurs to learn from.

    • Dan Linstroth

      Thanks a lot, Casey. You are one of the many people that I’m happy to have connected with through this experience that I otherwise would not have. More to come.

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