The Canvas Spindown

Our portfolio company Canvas made the decision to shutter operations early last year. But there is a bit more to entirely dissolve a company. Chris Poole, the founder of Canvas, describes the remaining work he had to do to entirely wind things down in this post.

Chris is a special person. Working with him has been such a pleasure. You get some great things from failure. One of them is my relationship with Chris.


Comments (Archived):

  1. JimHirshfield


    1. LE

      Nowadays everyone gets a trophy even people who fail.

      1. PrometheeFeu

        Sometimes, on the road to failure, people achieve some pretty amazing things. This isn’t getting a trophy for signing up. This is getting a trophy for building a great product and doing a great job winding down a company that couldn’t become profitable. This is more like getting a trophy for surviving 50 moves against Bobby Fischer. Sure, you didn’t win, but you still kicked ass.

        1. LE

          This is getting a trophy for building a great product and doing a great job winding down a company that couldn’t become profitable.But that’s the entire point of my comment “nowadays everyone gets a trophy”. The point in business if the idea isn’t profitable it typically is viewed as a failure. Similar to how in sports the idea is to win the game playing a good game typically isn’t enough on it’s own.Now if you want to suggest that simply being able to start a company like this, raise money, and survive for a number of years is an accomplishment then I agree with that. But not something worth of “a trophy” which is what I was trying to say.

  2. LIAD

    remember reading a Calacanis post back in the day when he jammed about this kind of situation and referred to it as ‘landing the plane safely’. its a great analogy.the plane is hurtling down. you can’t change that now – it’s a fait accompi. All you can do is decide whether it’s going to happen with you acting honourably, responsibly and with integrity or not.lots of things in life are way beyond our control. all we really have power over is how we behave

    1. fredwilson


  3. Twain Twain

    THIS: “Perhaps a provision could be added to future partnership agreements that removes that conflict by giving firms greater flexibility in waiving their liquidity preference and designating a beneficiary for returns in situations that would not move the needle for the fund, but could be impactful to a non-profit or worthy cause.”The topic of values, ethics and morals is constantly looped amongst us and it’s great when founders and investors are true to those qualities not just when everything is going well at the start but also when things don’t work out and dissolution is the only option.I remember having to represent the bank during the firesales of a few portfolio companies. It was a lesson to me in how who a founder chooses as an investor really matters.Some investors would squeeze for the pips (so they would have wanted even 1% of that $40,000) and definitely the IP.It’s the highest character and principle for investors to DO FOR THE GREATER GOOD and enable Canvas to resolve the dissolution in the way they are.#inspired #inspirational

  4. someone

    thanks for this. most of what is taught in entrepreneurship is based on success stories, but I find that my students learn more from failure. unfortunately, but understandably, there is not much course material based on startups that dissolved

    1. Steven Kuyan

      This is so true. I teach entrepreneurship and it was the students that were struggling by pushing themselves to go beyond just doing presentations and went out and sold their product to customers that ultimately failed, pivoted and an a A in the class.There isn’t much course material on failure but then again there is almost too much course material on success and the “right way” to start a company. And similarly too often blog posts and articles focus on founders’ actions during success but its during the dips and dissolutions that the true character of an individual comes out.This is a great story about the individual that USV invested in, not the company. Chris will likely go on to another venture and I’m sure USV or others will have no problem investing in him.

  5. Rohan

    I read that yesterday. The writing was poignant and heartfelt. He just sounds like such a great guy.

  6. David Semeria

    So Fred, how did USV overcome its fiduciary duty to its LPs?Did they have to explicitly wave the 1 cent / $ return? If so, sounds messy.

    1. fredwilson

      We are doing a good job for our LPs. I didn’t sweat it and they won’t either

      1. David Semeria

        I was just wondering whether Chris’ idea of donating the cash left to charity is scalable. Given many VCs can’t give the same reply as yours, I suspect it’s not.

        1. John Rhoads

          When you are crushing it there are benefits to being successful, this type of optionality seems to be one of them…Is venture capital even scaleable to the size of the current industry?

        2. LE

          I was just wondering whether Chris’ idea of donating the cash left to charity is scalableWhy does this matter actually? The idea in the business is to make things work and to win. Not to spend time on how the body is buried.And changing any agreements to even include this as a possibility would raise attention [1] and make people wonder why it was even being discussed.[1] In a small way similar to raising the issue of a pre-nup prior to getting married. Juxtaposed against “love” it is a very difficult area to navigate.

          1. David Semeria

            It’s different from a pre-nup because the money would go to charity.

          2. LE

            No the issue is not where the money is going. The issue is bringing up a negative issue and failure when you are on a positive discussion.Like let’s say you are planning a wedding. And you talk to the caterer and the catering hall operator. And they give you the option to buy insurance you know “in case for some reason the chef doesn’t show up or we have a fire here”. Raises issue that you really don’t want to think about. Or better you go in for an operation. And the doctor tells you “nothing to worry about we do this all the time”. Then they make you sign some form that says “we aren’t liable for jack shit”. Makes you think and brings in a negative. Kind of like that.I remember taking a drive when I helped buy my daughter a car. And the salesman brought up the car safety “because you know she is a young driver” or something like that. That made me think “oh boy maybe I should buy the other car not this that is even safer”. And so on.

          3. David Semeria

            I understand your point, but people know beforehand that most startups fail — that’s the difference.Upon further reflection I can see that Canvas was a pretty unique case and that it’s not feasible to try and make what they did best practice.

          4. PrometheeFeu

            Prenups just have to be correctly framed. There are very good reasons to get a prenup even if you plan on living together forever. (It can allow you to separate assets and liabilities and protect one spouse from the bad fortunes of the others.) I would have seen it as a red flag if my then fiancee had made a stink about a prenup.

          5. LE

            Prenups just have to be correctly framed.I definitely agree but the problem sometimes is getting by the “auto reaction” that people have at the mere mention of certain things.

    2. PrometheeFeu

      I’m not sure why that is problematic. Presumably, USV is allowed to take the long view and consider how their actions will affect their reputation with current and future founders.Despite what some commentators say, having a fiduciary duty doesn’t mean you have to pretend to be a sociopath with nothing in mind but short-term financial profits.

  7. Twain Twain

    And this was in my LinkedIn feed today…

    1. JamesHRH

      as is a startup that does not make $$$.

      1. Twain Twain

        Chris Dixon on hobbies: “Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.”*…Some of the biggest techcos in the world didn’t make $$$ for years but the investors continued to pump money in because the techco’s values and what they were trying to do (solve hard problems) aligned with the investors’ values and it was also a product they really wanted to see in the world.And then WHOOSH! there the techco shot up that proverbial hockey stick!The other thing in my Linkedin feed was a link to a podcast on SaaS sales so I had a little think on what might have happened if Canvas team had tried to sell their software to a company like Fisher Price.

        1. Twain Twain

          I had the “What if Canvas had licensed to Fisher Price / Mattel / other children’s toy co?” thought because yesterday I saw this tweet from MG Siegler.

  8. WA

    Intelligent failure. People don’- projects and ideas do. Lessons for us all.

    1. Redwoods

      great thought

  9. David Semeria

    Hats off to Chris for going beyond the call of duty.I’m curious as to what happens when the company has no cash or assets left to pay for the wind down. How is the liquidation financed?

  10. William Mougayar

    “while it failed as a business, it had not as a product.” It’s a significant consolation and a true statement in so many situations.It’s big of a VC when they maintain a great relation with an entrepreneur, even if the startup didn’t succeeded. I’ve seen the opposite happen.

    1. pointsnfigures

      yup. there is no easy way sometimes to accept total failure. I think Fred’s post yesterday talked about that.

    2. Supratim Dasgupta

      So true. the opposite is what happens most of the time.

  11. BillMcNeely

    Chris settled the bills and still thought todonate to charity? no sports cars on the VCs dime nice to hear.You hear so often top 10 accelerator companies blowing through investors money even before the program is over.well done.

    1. Supratim Dasgupta

      Looks like he is the opposite. Read on his wiki.He is ‘living with his mother while looking for a way to make money from owning 4chan’

    2. LE

      nice to hear.Otoh part of success in business is sometimes being a little blood thirsty and being able to make the selfish self centered choices. You see that now with companies like Uber. And don’t think for a minute that some investors don’t like that type of behavior because they know it is often necessary.

  12. pointsnfigures

    he failed, but i bet USV gives him a good reference. that can serve him well in the future. how many entrepreneurs fail and fight with investors? don’t see investors saying they are bankable in the future.

    1. LE

      but i bet USV gives him a good referenceAs a “somebody” he has a much better chance of raising capital obviously even after failing than someone who has never failed and has no halo. All else equal. The odd thing about it is that discounts the luck factor in the first success.

  13. Marissa_NYx

    There’s a lot of soul in that article. I felt the weight he is carrying. Winding down is first of all a subject in morality and ethics.

  14. Anne Libby

    This story about the “miracle on the Hudson” crossed my Twitter feed this morning. Though most of us will never (actually) save anyone’s life at work, it’s a true leadership behavior to be the last one out, after double and triple checking all of the details.Nice job, Chris.

  15. Alejandro Cosentino

    I needed to shut down a company where Fred was a board member in the early and crazy days of internet in Latin America: Gratis1. Was not an experience I was planning to get but I learned a lot from that. Was my PhD. I am grateful to have traveled that road.

    1. fredwilson

      Wow. A blast from the past. That one was a mess. All part of the starmedia stuff I talked about yesterday on the podcast

  16. JamesHRH

    Someone I know here in CGY was involved in a startup – based here – that took off. It outgrew the founders abilities but not their control. He joined, it grew to over 200 people, then he and one other person were the people that sold off the IP and closed the doors.His memorable line: “It was everything you could ask for in a startup, and less.”Tough stuff brings out true colours.

  17. Supratim Dasgupta

    Very nice story.Read on Chris’s wiki he is ‘living with his mother while looking for a way to make money from owning 4chan’ Am sure 4chan will be a home run and all VCs will get tons in return. All the best to Chris! The wishes of the disadvantaged children will not go in vain.God Bless you!Fred, has USV invested in 4chan?

  18. johnmccarthy

    For those of us that handle finances and ops for startups and play the Utility Infielder role, this is part of the landscape that is unavoidable. I’ve described this process as being like the guy at the end of the parade that cleans up after the horses and elephants have passed. It can be a great, but painful, learning experience. Key is to not let it negatively influence you as you move onto the next opportunity. or as Winston Churchill puportedly said “Success is the ability to go from one failure to another with no loss of enthusiasm.”

  19. Redwoods

    this company must have had a great culture – hope the next one flourishes Chris

  20. Peng Jin

    What an amazing person Chris must be to have the courage to make the best out of the worst, the respect for the users to continue serving them amid turmoil, the sense of responsibility to answer for his actions. I see more inspirations in this “failure” than in many superficial successes.

  21. Kirsten Lambertsen

    Chris Poole is a pretty key figure in the history of the Internet at this point. It’s exciting to see him set an example, maybe even a standard, that others will be able to follow in the future because “Chris Poole” did it.Considering that his investors gave him unanimous approval to his requests, I’d say he had the ‘dream team.’I hope his next one is rocket.

    1. Kirsten Lambertsen

      Should have been “Chris Poole did it.” More coffee needed.

    2. LE

      What is the example that you are referring to? That if someone fails they give the remaining capital to charity?

      1. Kirsten Lambertsen

        Giving the remaining capital (if it’s not significant enough to make any difference to investors’ bottom lines) to charity.



  23. LE

    I understand that neither venture firms nor their LPs are charitable organizations, but I can’t help but think there are better ways to handle dissolutions that would see immaterial amounts of money returned to the fund. Perhaps a provision could be added to future partnership agreements that removes that conflict by giving firms greater flexibility in waiving their liquidity preference and designating a beneficiary for returns in situations that would not move the needle for the fund, but could be impactful to a non-profit or worthy cause.The only reason this happened (the 40k donated) is because the amount is immaterial so it’s easy for someone to say “go ahead and donate the money”. It’s nominal and apparently of no consequence.But Chris is is right. Venture Firms and their LP’s are not charitable organizations. And I’m sure they have their own ideas on how they would donate the money and who would get that money. Sorry to say this, but I’m not sure that I would have given money to an organization that “that provides disadvantaged children with access to art programs” [1] because I think there are other things that would be a greater benefit than “access to art programs” That is, something practical that can lift them from where they are, not be yet another person not earning a living chasing a creative dream. [2] Of course there are always a million ways to rationalize this type of thing or anything by citing “benefits”. The whole idea is always to get the best outcome for the dollars spent.[1]…[2] Because at this age children are very impressionable and they might not realize that art or artistic pursuits may very well not be the career they should be pursuing regardless of whether they enjoy that or not.

    1. bsoist

      I agree with your comments about the complexities of deciding on a charity, but I’m surprised you would question the impact art has on individuals.

      1. LE

        I’m not questioning the impact that art has on individuals. I’m questioning the impact vs. a different charity for the individuals in question.. Allocation of resources and time. [1]Also by “you would question” do you mean me specifically or anyone? If me why do you think it would be unusual for me to say that? Sure I did photography and made money in high school and college and it helped me in business. However it was supported by my parents not as an art pursuit, but recognizing that it had benefits that extended beyond art. They didn’t support my sister’s art career at all (didn’t want her to go to school in Rome which she ended up doing anyway). They were right. She is a great artist but she ended up having to work for me. Her first job out of college was doing framing in an art shop at $5 per hour. After she worked for me she learned printing and graphics (not printmaking which was her worthless major) and left a few years later and got a great job at Fortune 500 firm.To make a big generality art is a great hobby. But pursuing it as a career is often a mistake if you need to earn a living. I can do art now if I want and have plenty of fun as long as there is money to pay the bills. That’s different than making it a career. This whole “do what you enjoy and everything will work out” is typically not a good idea from my observation.[1] My feeling is that parents often make this mistake when they encourage certain activities by their children. Children only have so much time and if they are spending time on activity “a” even assuming a benefit that means they won’t have time for activity “b” which could offer a greater benefit.

        1. bsoist

          Thanks for the reply. You and I have discussed the “art as a career” question, and found some common ground on opinion, so I was looking forward to this.I’m not questioning the impact that art has on individuals. I’m questioning the impact vs. a different charity for the individuals in question.. Allocation of resources and time. Gotcha. I disagree. I think very few things have as big an impact as art and I think since it’s often one of the first things cut from school programs, etc, charities like this one do great work.Also by “you would question” do you mean me specifically or anyone?Interesting that you – and I mean you 🙂 – would ask that because I did consider using _one_ in place of _you_ there, but I was trying to make it more personal. I also wondered about using the word _surprised_ there and I think that’s actually where I went wrong.I am *surprised* when *anyone* minimizes the impact of art, but it actually didn’t surprise me that *you* did, but I wanted to challenge *you* on it specifically. I hope that makes sense.RE: careerNo question I agree with you about the opportunity costs of choosing a over b, but I think it’s important to value time invested in things that transcend training for a career.

          1. LE

            Challenge is always good. Anyway, this supports what you are saying:http://www.washingtonpost.c…However note what it says in particular:“Low-income students who had arts-rich experiences in high schools were more than three times as likely to earn a B.A. as low-income students without those experiences. And the new study from the National Endowment reports that low-income high school students who earned few or no arts credits were five times more likely not to graduate from high school than low-income students who earned many arts credits,” Education Secretary Arne Duncan said in a report titled “Arts Education in Public Elementary and Secondary Schools: 2009-10.” I mean you can certainly see the flaw in drawing the conclusion that is stated above, right? This type of summary is always suspect. (Sponsored by the National Endowment for the arts no less). Many variables. For all we know there are other differences between particular schools or the type of student who actually engaged in an arts program and to what extent. (Similar example might be type of kid who is likely to be in the band playing violin vs. one who is not. Not exactly a “gang banger” type, eh?) So can you take a gang banger and tame them but teaching they to play guitar? Maybe. But the ones who try off the top are not the same as those who don’t. You’d need to double blind this type of thing to make sure it wasn’t self selecting.I find it hard to believe that if I actually read this study I couldn’t find other flaws in the conclusions and how they were reached as well as the methodology.Look budget and time not being an issue certainly not a bad idea. Won’t hurt that’s for sure. But unfortunately “shop” class might actually be a better idea given real life constraints.

          2. bsoist

            Thanks for the link. You probably realize this, but I am not basing my opinion on that article or on the study referenced in it.RE: flawsAgreed. There is a difference between correlation and causation.RE: shopNot gonna argue against shop – as a matter of fact, it fits my definition of “art” to begin with. I think students should learn to create things they care about.Look budget and time not being an issue certainly not a bad idea.yet you seem to be arguing that a charity like this should not exist until every other need is met.

          3. LE

            yet you seem to be arguing that a charity like this should not exist until every other need is met.Well I know that it probably sounds like that. But I actually feel that people should be free to spend their time and money they way that they see fit. If “rich” people want to support the Metropolitan Opera because they say they like opera but really like hob nobbing with other “rich” people that is their right to do so. I act in my own self interest as well although I am definitely less likely to cloak it in some other bs to make it sound more acceptable. And to hide a true “motive”.Do I think that people waste time and energy and money on things that aren’t “important” (by my way of thinking). Yes I do. And they are always able to rationalize that money spent … but if it’s their money then that’s their decision and right. What I have a problem with is people rubber stamping things without actually thinking or knowing it is the best way to spend money.One thing I can tell you is this. If I was in charge of allocating money to the arts in schools I would absolutely be willing to listen to all sides of the argument and ask questions, read, and make a calculated decision on how money should be spent. And if I (after a through review) thought there was benefit I would change my mind and vote for the spending. You can’t really be any fairer about it, can you?Separately this is similar to discussions I have with my wife about my stepson and sports vs. time spent on other things.One other thing. I regret that I never learned piano or guitar in high school. However I regret less that I didn’t learn to play the (insert some really large band instrument). Why? Because if I learned guitar or piano I could play it today for enjoyment. Many band instruments are only for band. That’s really part of my point. Given choices try to get the most bang for the buck.

    2. ShanaC

      a good art program will help you conceptualize problems in new ways, a healthy skill most people should have

  24. Richard

    Amazon Web Services account was broken into—likely by a Bitcoin miner.What’s the connection?

  25. ShanaC

    i wish people could be this good to each other and the world all the time

  26. Lancewlars

    Is it normal practice to open-source a failed start-up’s code base? I think that is the most impressive part of this. It’s a beautiful example of creative destruction.

    1. fredwilson

      not common but getting more so

  27. Harry Glaser

    I would love to see a post on how to think about acqui-hires in situations like this. My sense is that employees, and certainly founders, have little interest in working for some acquirer when they have many options in a market like this. But they may feel a duty to the investors to generate some kind of return. Maybe it’d be materially or reputationally beneficial to less well-known investors.Obviously this is not an option for every team. But certainly it’s an option for some. What’s the right way for founders and investors to think about the acqui-hire option, if the time comes where the company is not successful?

  28. Twain Twain

    @fredwilson:disqus – Chris Pool: “As 4chan’s sole administrator, decision maker, and keeper of most of its institutional knowledge, I’ve come to represent an uncomfortably large single point of failure.”Not many 20-somethings would have that level of humility because ‘Young Turk’ egos often tell them to say they’re “winning” even when they’re not. * http://uk.businessinsider.c…I hope someone suggests to him that he takes time to travel, maybe do the European road trip that you and Gotham Gal did to open up his perspectives.Then return and do something bigger, better and stronger than what he’s done before. And what he’s done before has been remarkable and brave.