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Turning out the lights is a type of exit.

In my life as an early stage investor, I’ve been closely involved with so many businesses, there were bound to be numerous stories of failures, hopefully from which to learn lessons for all of us as we go forward.

Several times in my investing life, as the final board member making the arrangements to dispose of remaining assets, I have literally been the one to turn out the lights, carry out the books and records to my car, and become the only remaining contact between the success-failurefailed business and the investors, bankruptcy court, or creditors.

In aviation circles, we read in our pilot magazines about “Never again!” or “I learned about flying from that.”  Pilot-authors tell their stories in the first person, and all of us readers slow down to think while reading of these events, wondering “what if” or whether this could happen to me.  And if it did, would I have reacted differently?  Most importantly, we think: ‘Now that I know this, would I behave differently if it did happen to me?’

[Email readers, continue here…]  So that is why we devote just one of our exit focused insights to just this subject.  Professional investors rarely attach a red letter upon a failed entrepreneur.  In fact, if that person can tell his or her story and relate the lessons learned clearly, there is a positive response many of us will make to the next pitch from that person.

We who invest look for patterns from previous experience.  Some of those patterns help us to spot and avoid problems we have seen play out in the past, often to disastrous conclusion.  We learn to worry over obsolete inventory, too rapid hiring, failure to spot industry trends that make an offering less attractive, and so much more.  Most of us can tell specific stories of losses that led to these expensive and gut-wrenching lessons.


  • Michael O'Daniel

    Speaking from the perspective not of an investor but a senior manager, it is extremely frustrating to see the company for which you work heading for the cliff and not being in a position to do anything about it. If your CEO won’t listen, it’s really not considered politically correct to make an end run and go to the investors. But then again, sometimes it’s the strategic directions mandated by the investors / board themselves that are driving the company toward the cliff. What kind of lessons can you learn from a scenario such as this?

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