Starting a High Tech Business: Making Hard Decisions


I'm the founder and CTO of Kynetx. This series of articles relates my discoveries and feelings about starting a high-tech business. This is the thirty-first installment. You may find my efforts instructive. Or you may know a better way---if so, please let me know!

Suppose you had a big tank. It's got water in it. There's a hole in the bottom and a few small pipes delivering water. Unfortunately the pipes are smaller than the hole. Your goal is to never let the tank run dry. You've managed to get by through periodic deliveries of water from an out of town supplier. He just called to tell you that you're not getting this week's delivery. In fact, it's not coming next week either. He's determined that delivering water to you "isn't strategic." You can run a few more pipes, but that takes time. In the meantime, the water in the tank is getting shallower and shallower. The only solution is to plug up the hole.

This isn't a perfect analogy, but it's a good enough description of the problem to define the solution. Last week was a tough one. On Friday we laid off six amazing people who are more than just colleagues or employees, but friends and people I have huge respect for. Every single person left a hole in our organization that will be hard to fill.

Without getting into details that might embarrass some people, the short story is that Kynetx had a bridge financing round that failed to come together. That happens and looking back, given the data we had I think we made the right decisions along the way. On Wednesday it became clear that the delivery wasn't happening and we couldn't run pipes fast enough. I've been around long enough to know that people represent the lion's share of any budget and any serious cutback always impacts people, their families, and their lives. At a big company there'd be weeks of notice and severance. Unfortunately at a startup, those luxuries just don't exist.

When you find yourself in this situation, the trick is take action quickly enough--before the tank is dry--that you can keep moving forward. The key word there is forward. Kynetx is moving forward: We are still planning to hold the most amazing tech conference Utah has ever seen on March 22 and 23: Kynetx Impact. Come and see what we're doing. The keynotes are amazing and the topics--APIs, cloud-computing, webhooks, events, and real-time Web--will blow you away from your socks. We will be making some great announcements at Impact. We still have some great clients--large and small. We still have a team--albeit smaller--that can deliver. We still do Free Lunch Friday every week.

Bottom line: while we are smaller, we are not in any danger of going out of business. In fact, we're not even in danger of merely marking time. We are rushing forward with our plans and have a doable 2011 strategy that will set us up for a very bright future.

Here are some of the reactions of people impacted by our decisions:

I can't adequately say how profoundly grateful I am to work with people who have great attitudes, understand the world of start ups, think like entrepreneurs, and are gracious even when looking into the teeth of a storm. All I can say is thank you for sharing the journey.