Thank you for writing this. As a startup CEO with 12 employees, I have a daily reminder of how much cash is in the bank. It is absolutely unacceptable and ridiculous for a CEO to mismanage a company and then write a blog post saying "Oops, burn!"

Also considering that "burn" is one of the very few things that is wholly within your control.

At first I thought "this statement is madness!"

Then I thought about our burn, what the spreadsheets look like, how we estimate runway, and so on, and I realize this is uninformed madness.

If you believe this, then you understand that 400 people losing their jobs is the definition of the wholly controllable burn.

I'm not sure I follow.

Let us wait until you have 400 employees.

400 employees will mean I still have a spreadsheet that tracks my cashflows and ensures I run a regular town hall to inform employees where we are. At what point does one not have such a spreadsheet/dashboard/report?

Heck, a 400 you should have a part-time or full-time CFO who manages much of that for you to avoid such situations.

Do you currently report how much cash is in the bank and your corresponding runway to your employees?

It is hard to do at the best of times, particularly hard when things are tight to balance transparency with not wanting your team to start looking for new opportunities when things are getting close to the wire. Add to this different people have different perspectives on what is "close to the wire". For me it's 6 months, for many it's 12 months, for some it's less than 30 days.

> Do you currently report how much cash is in the bank and your corresponding runway to your employees?

The startup I work for does, and other startups provide this level of transparency as well. It's not hard, unless you're incompetent at communication and finance (but you shouldn't, right? because you're a founder/co-founder/leadership who has peoples' financial lives in your hands, because this isn't a game for people who need to make rent/mortgage payments every month).

"We have X in the bank, this is our runway, we have this many more months to be profitable or raise another round."

You are possibly correct, but I have no insights into this company, hence I cannot come to conclusion as to what they have or should have. The situation may just be more complicated and complex than the spreadsheet theory.

I often wonder/worry that these sort of "bailouts" and acquisitions reward founders for poor decision making.

I am guessing the founder in this case is going not going to be rewarded at all. Sounds like the company had a lot of debt and the "acquisition" was an asset sale. This means that they startups.co bought the assets and left the original company with the liabilities (aka millions of dollars debt). The Zirtual company will likely have to go through a chapter 11 which will be painful. She might get a little bit of extra salary from consulting for the new company but I'm guessing that's it. Overall I am guessing this is a horrible experience for her.

> Overall I am guessing this is a horrible experience for her.

You either succeed or you learn.

Thanks for the reply cvgraham!

I can't say I'm surprised. I watched her speak at a conference once and was alarmed at how incredibly ill-prepared she was to run a business

This is an incredibly naive view of how SV works. See e.g. http://techcrunch.com/2015/07/25/startups-and-the-big-lie/

I have a rather enlightened view of how SV works. I was the primary engineer on Uber's promotion and referral system for most of last year and ended up transferring to the internal audit team. I have a knack for risk identification and management.

There is a difference between a well-run company with manageable burn that must raise capital to continue growing, and a company where the realistic prospects of a capital infusion are slim and the financial situation is dire.

I used to work in the game industry, and both studios I worked at ended up gradually laying people off and eventually shutting down. Layoffs are the expectation for a struggling company - sudden shutdown is a sign of poor executive leadership.

Honestly no offense intended; however, even if you're the VP of risk management for Uber currently - a company with 9K employees having raised $6.9B - that in no way what so ever gives you any insight as to the usual way in which young (series A say) companies operate. None. Zero. Zilch.

I'm not arrogant enough to claim to be an expert, but I have had a decent number of experiences for someone my age. I grew up in a small family-owned sandwich shop (which failed in 06 after 20 years). I worked for multiple mid-sized game development studios before I moved to SF to work for a post-series A 13 person YC startup that I watched grow to 50 people. I spent some time at BitTorrent, which has had its share of financing and staffing fluctuations over the years.

I've been a part of a number of companies as they've succeeded and failed, and I've learned the difference between doing so gracefully or incompetently.

Not as naive as yours is overly cynical.

Perhaps, but experience does that ;)

Well, I've been around the SV block once or twice.