Worse than becoming lifestyle company is becoming a zombie startup.
Zombie is when founders get rid of almost everyone except what they need to give the impression of effort, do little work, but draw an income and slowly spend down the money they raised until it’s gone.
I was one of the very few survivors at a startup that turned into a zombie in 2020 (went from 100+ employees to 10 in a matter of weeks).
In some ways it was a cushy job and a privilege, just wish I realized the founders didn’t truly care about success. Cause then I could have shared the mindset and better prepared myself and my skills for life after.
IMO that’s not a zombie because it has an expiration date (when the money raised runs out).
A proper zombie is a lifestyle company without the lifestyle — enough revenue to maintain an eternal startup crunch and trying to make a product work, but without the resources to actually grow. Doesn’t die, doesn’t quite live.
Hindsight is 20\20, the company probably would have been better off thawing itself until lockdown ended then going right back to what it was doing (that’s what their main competitor did, and while rumors of their demise always abound, externally they’ve grown and raised more rounds).
One of the founders is a niche big-shot in the VC world and well connected. I assume eventually they’ll be acquired for an undisclosed amount of $0. It’s been a year since I left and until this post I’ve been shocked it’s yet to happen. Now I wonder if they are waiting until they payed out all the money they raised as salary to play that card because otherwise they need to give the money up for no real benefit other than continued employment.
I question your read on what happens here. At most startups the investors control the board (there are a few where a charismatic founder manages to retain control, but that's rare).
If the board thought the founder was just transferring the remaining investment to himself slowly they'd fire him and replace him with someone to wind operations down.
Like most zombie startups, reason board doesn’t do anything is the amount of money is negligible to them. Even if it isn’t to you or me.
Plus the possibility they do hit it big is always there. It’s not like they aren’t putting in any effort and collecting a salary. They just aren’t grinding.
Zombie is when founders get rid of almost everyone except what they need to give the impression of effort, do little work, but draw an income and slowly spend down the money they raised until it’s gone.
I was one of the very few survivors at a startup that turned into a zombie in 2020 (went from 100+ employees to 10 in a matter of weeks).
In some ways it was a cushy job and a privilege, just wish I realized the founders didn’t truly care about success. Cause then I could have shared the mindset and better prepared myself and my skills for life after.