Found & Lost: Losing Your Identity as a Founder

Editor’s note – Today’s essay was written by my friend Kristen Anderson. Kristen founded Catch, a fintech company focused on providing benefits to independent workers. Catch shut down earlier this year, and Kristen generously volunteered to write an essay about her experience shutting down the company and navigating the immediate aftermath of that decision. It’s a deeply personal essay, and I’m extremely grateful to her for writing it.

Hi. It’s me. A former YC founder backed by the most prestigious investors in Silicon Valley. I raised tens of millions of dollars and spent more than five years obsessively building. I’ve been written about in TechCrunch, the New York Times, Forbes, Business Insider, and many other media outlets. For many people, I was the poster child for a scrappy, first-time founder with a chip on her shoulder and an unwillingness to keep quiet.

Until all those things evaporated.

I’ll spend exactly one paragraph talking about why Catch failed, but I’m going to spend most of this piece talking about you instead. You’re way more interesting than I am anyway. 

Here goes: 

Catch failed because we couldn’t make enough money. We couldn’t make enough money because I made a lot of bad choices. I made the wrong choices about our business model. I took the wrong bets about our acquisition channels. I assumed things about vendors who ultimately devoured our margins. I made mistakes in hiring. I prioritized our roadmap wrong. Was it all my fault? Absolutely not. Everything we did achieve was thanks to a blend of skill and luck, and it turns out our failure was too. But since there’s nothing you can do about bad luck, it’s more valuable to look at what was within our control. And there was a lot.

But that’s not really the important part of this story. The important thing we’re going to talk about is what happens when you lose what you found. Whether you shut down, sell your company, or step away in due course to let someone else steer the ship, a core piece of your identity is gone. 

For some of you, it might feel like something shriveling up and slowly disintegrating into nothingness. For others, it might feel like an amputation — a clean cut that’s there one day and gone the next. For a few, it’s an explosion that comes out of nowhere and blindsides you into a million little pieces. 

In the early-stage fintech fundraising market that we’re in right now, many of you are going to experience some form of this death. I would say “too many,” but in many ways, this death is something to cherish instead of fear. 

So what happens when the person you were is no longer the person you are? You’ve made sacrifices — perhaps for years — in your salary, your leisure time, and probably to some extent, your mental health. You’ve spent more time thinking about a problem than most other people in the world. Whether by choice or by force, you’ve got to come to terms with your company not being your heart and soul. 

But let’s back up for a second. What happens before you get to that point? Well, for most founders, the death of your company (or your relationship to it) isn’t something that happens overnight. For most of us, we’ve seen it coming for months. 

At first, it’s a panicked wake-up in the middle of the night. Fleeting thoughts after a bad week. A gnawing feeling in your stomach that things just aren’t going the way they’re supposed to be going. You won’t tell anyone yet, except maybe your co-founders. Your job is to be an optimist. To make the impossible happen. And probably, you’ve felt this feeling before and overcome whatever challenges you faced, so you assume this time it will just go away too. There’s just a prickle of intuition that this time might be different. 

Then, the data starts to come in. Missing targets. Team members churning. A major partnership falling apart. The problems are real. At this point, you’re doing your best to solve each problem one by one, but you know it’s time to let the Board know. You reset expectations about the next raise or milestones you’re trying to hit. For many founders, there is less pain in this phase because you have a path of execution to follow. There’s work to be done, and you excel at doing work. It’s who you are. Crises are the best time to achieve the impossible.

Next, you start thinking about words like “survival” and “viability.” It becomes your sole priority, and you are probably working out exit scenarios. Are there partners who might acquire you? Competitors? You’re working with your Board and key investors to define what assets you actually have. For me, this phase was brutal. It starts to feel like there’s no way out. No way you’ll actually succeed. And there are a lot of people telling you that the last several years of your life have no real value to anyone.

When you enter the phase of trying to secure a sale, you go back to fundraising mode. Relentless optimism. This time, though, it’s about convincing people to see the value you’ve already created instead of the value you will create. There’s a lot of rejection, but if you’re any good as a founder, you know that the key right now is to constantly get your hopes up. Believe. You only need one yes. It’s a brutal mental cycle, and in a market that’s dammed by a frozen IPO track, the upstream bottlenecks make that one yes more and more unlikely with each passing month. Catch received a few exciting verbal offers that never materialized because of public market uncertainty, investor skepticism, and the general unwillingness of a Board to take risks.

(I’ll note the irony here in that many buyers told us they’d be more able to take the risk if our revenue was higher. But, my friends, if our revenue was higher, the business wouldn’t need an exit! Such is the logic of Corp Dev in the long winter of 2023.)

Finally, you get to the point where you have to be honest with everyone. It’s not going to happen. The first time you say out loud that you have to shut the company down, it will stick in your throat. It will burn like a tequila shot at 9 in the morning. After you say it, you expect that someone will save you from the words. That your investors or your co-founders will point something out or turn the graph upside down or find an extra bank account with a few million dollars in it. You kind of expect that someone is going to prove you wrong, and you’ll show up tomorrow as if you hadn’t just said the fatal phrase. 

Then, the logistics start to kick in again. There’s a lot to do: informing investors, notifying customers, and turning off your product. Especially in fintech, there’s a lot of regulatory box-checking to make sure you’re filing with agencies, following compliant processes, and providing the necessary customer support. If you’re lucky, you’ll be mostly numb. Unfortunately, because of that regulatory overhead, this period is often more than a month or two of mundane tasks that have no upside.

Not to mention you’ve also got to let your team go. You now have to tell the people who trusted you that you’ve failed. The people who gave you their most valuable resource — their time — are now going to have to find jobs in a market where top tech companies have laid off thousands of competing job seekers. You know your team is good, but you also know that it’s annoyingly hard to compete with resumes that have strong brand names. Their depth of experience is impossible to explain to so many companies who just want credentials. Having to put dismissal information into payroll for every person one by one just about broke me.

Oh, and once it becomes public that you’re shutting down, you’ll get to experience a rush of well-wishers (thank you sincerely to all who wrote to me), information-seekers (no, I don’t have 30 minutes for a call to tell you, a stranger I’ve never met, what went wrong), and grave-robbers ($1,000 for our domain name isn’t worth the legal work to even respond). You’ll be picked apart in public, and everyone who thought you weren’t going to make it will silently — or not so silently — gloat about how they were right.

So why do it? You’ve definitely thought more than once about shutting your laptop and moving to Mexico City or the Bahamas or wherever else you can hide. You’ve thought about shedding your entire identity down to changing your name, dying your hair, and figuring out what plastic surgery will make you unrecognizable. You know that everyone loves a comeback story, but you also know that comebacks aren’t guaranteed. You’re sitting in the depth of your failure, and suddenly your investors aren’t returning your texts and those relationships you thought you’d built while you were CEO where people genuinely liked you? Turns out they were just opportunistic professional encounters, and now you have nothing left to give. 

So why do it? You’re mentally back on that beach in the Virgin Islands. You’re ready to be a bartender or a carpenter. Why go through all the public humiliation and private shame? There’s a lot of work to do, and your upside is approximately zero. 

Because doing the right thing is always the right thing. 

You know that careers are long. You know that you know so much more than you did when you started the company. You know that people believed in you and don’t deserve to be left high and dry. You know that integrity matters most when times are hard. And you know the most important thing: your value is not tied to the value of your company. 

So you do it. You go through the grieving and the heartache and the judgment. And now we’re back to the question I asked at the beginning: what happens after you lose what you founded?

To be honest, I’m only a few weeks out, and I have no fucking clue.

Eventually, Catch found a buyer for our technology. We’re in the process of closing the sale, but when the sale amount is a fraction instead of a multiple, it’s hard to celebrate the exit. 

So I’m not a founder anymore. I joked on Twitter that I am a failed founder, but I’m not really that either. I’m a former founder with some serious scars. But the wounds aren’t actually fatal. They’re the mark of everything I learned. They’re the mark of ways I will do better next time. They’re a signal to the world that I was in the arena and that I will be back for more. 

If you’re going through this journey too, know that you aren’t alone. If you’re having thoughts of harming yourself or others, please ask for help. Your worth is not tied to the worth of your company. This community is here for you.