They definitely did put in a lot of work, which is why I'm surprised they're giving up now. Eg., they made a whole bunch of fabulously slick presentations for investors that must have taken dozens of hours each (none of them invested, but hey, that's startup life).
I've seen this as well but in a much later stage of running a company, a nearly done deal went south at the last possible moment and everybody got demoralized to the point where they wanted to quit. I ended up selling my house to buy everybody out, and it's been a pretty good company ever since.
Not everyone is made to be an entrepreneur you have to take your beatings and keep going, that is the only road to any kind of success unless you are a very lucky person.
I'd make a reasonable valuation of what you think the whole project is worth at this time, try to figure out fairly what their contribution is worth and then offer to buy them out if you can afford it, or, if you can't to take them on as silent partners and give them non-voting stock. The latter is a (nearly) surefire way to never get any investors on board though, you have to be aware of that.
Then, after that you go and work like the devil to make it happen.
If you can't afford it and/or you don't want to have them on board as deadwood I'd just walk away, and do something new.
About your 'black cloud' following you, this can happen simply as a series of coincidences, or it might have to do with the company you keep & pick.
That's very hard to comment on without knowing a whole lot more about the situations you were in, one thing is for sure though, if you want stuff to happen and to succeed then you'll simply have to shift over to the drivers seat, if you think you 'need others to succeed' you are not yet in the right mindset, you are seeing yourself as a victim or at the mercy of others. That needs to change for sure.
Maybe it's the repeated failures to get investors that did it. They might need to be reminded that the lack of investors is not necessarily a bad sign - audiences, unlike VCs, have nothing to lose by giving you guys a chance.
We could have launched it last month, but I don't think I could handle the workload myself in my spare time, and they want to keep delaying our launch until they think the site is perfect.
screw that, launch. launch it and control your workload by controlling your marketing plan, trying to keep the number of users in check with what you can handle. then polish it.
Seconding this. You're not going to have a perfect site specifically because you haven't launched. Without audience feedback, all you're doing is endlessly second-guessing yourselves - that sort of feedback exacerbates any existing groupthink behind the design, potentially causing it to be far less usable than it originally was.
Third, launch then get feedback, interate quickly. I was scared when I launched my startup, but you will realize it takes time to get users to try your service out. We were lucky to get techcrunched before launch which led to a bunch of signups for our beta. So we had about 2000 users on our list prior to launching.
This is false. You could certainly handle the workload. You may handle it poorly, but you can handle it. It will not kill you. It will not maim you. Perhaps you gain 10 lbs from overeating due to stress and your WoW rating goes down (or whatever you fill your time with). But the statement above is patently false.
I say this as someone who lies to himself like this sometimes, too. Any time you hear yourself saying the words "can't" and "need" you have to stop and realize that you're probably lying to yourself. You don't _need_ that feature. You _can_ survive being stressed out for 3 months.
Launch early and iterate often! Websites fit this model perfectly. Launching can be scary -- but what do you have to lose? Feedback from a partially working site is better than nothing!
They definitely did put in a lot of work, which is why I'm surprised they're giving up now. Eg., they made a whole bunch of fabulously slick presentations for investors that must have taken dozens of hours each (none of them invested, but hey, that's startup life).