Hard Decisions

Every startup journey involves making some really hard decisions.

Yesterday our portfolio company Kik announced they are shutting down the Kik messenger and parting ways with all but nineteen of their team.

The Kik team has spent almost a decade working on the Kik messenger. Although Kik’s popularity has waned in the face of iMessage, WhatsApp, Facebook Messenger, etc, etc, it still has 10mm monthly users and almost 5mm daily users. But it has never been a profitable business in a market full of free competitors.

The decision to shut Kik and scale back to a small core developer team is all about continuing to support the Kin cryptocurrency which has over 2mm monthly people earning Kin and over 600k spending Kin across a large network of mobile apps that run the Kin SDK.

But even so, shutting down something you have worked on for almost a decade and parting ways with 90% of your team is hard.

Another thing about hard decisions is the sooner you make them the sooner you realize the benefits of making them. Postponing them is the worst thing you can do.

Kik is not the only company in our portfolio and is certainly not the only company out there in startup land facing very hard decisions right now. I see a lot of this thing in my business and it doesn’t get easier.

What we must do is support the teams making these decisions and getting to the other side of them.

I will end this with a quote that the founder of one of our portfolio companies sent me this week. I think it sums it up nicely.

My centre is giving way, my right is in retreat; situation excellent. I am attacking.

Field Marshall Foch in the Battle of the Marne

Comments (Archived):

  1. jason wright

    Foch indeed.”We few, we happy few, we band of brothers…”p.s. its legal challenge to the SEC’s position must be costing a small fortune.

    1. JLM

      .There is no “challenge” to the SEC’s position; the SEC has initiated an enforcement lawsuit against Kik/Kin after going through an extensive Wells Process in which both sides got a free look at the other’s case.Kik/Kin is fighting for its life.The penalties for losing this fight can include: returning the money raised with interest, penalties, and barring individuals from the securities business, accessing capital markets, or serving on boards of companies.The SEC wins 97% of these cases and the ones they don’t settle on terms similar to a loss.This is not bean bag. The SEC does not have a more severe enforcement action than what they have initiated.It is difficult to imagine the facts that Kik/Kin might put into evidence that might support the SEC not prevailing. There is nothing in their Wells Response that even seems remotely plausible.There is the world as crypto would like it to be and there is the orderly world that the US SEC believes there is. This is not a clash of warring worlds. It is the SEC’s world and crypto is living in it.JLMwww.themusingsofthebigredca…

      1. Matt A. Myers

        I assume there’s a process to connect with the SEC to ask if they think a certain structure violates certain rules or puts you within certain rule sets – or do you have to depend on your own lawyers/consultants first?

        1. Richard

          If you really know what you are doing their is a SEC whistle blower program. There are many attorneys that accept cases on a contingency basis.

        2. JLM

          .You can get an advisory letter/opinion on anything from the SEC. You can go see them. I was on the phone with the SEC on a personal securities matter (Ft Worth office) last week. They are just normal people.The best securities lawyers in the US go back and forth from and to the SEC as part of their professional journey.JLMwww.themusingsofthebigredca…

      2. Richard

        The fact that the SEC DOJ DOD let things get this far is concerning. The banking business requires some of the smartest people in the room to keep the $ stable as well as the world’s nefarious actors at bay. Look no further than the repo market this past week and ask yourself what would happen if the world didn’t trust that the US was able to provide sufficient reserves. Maybe we need a 16 year old girl to shout down the crypto crowd. It works every time.

        1. JLM

          .The issue is whether Kin is a security as measured by the Howey Test. It is a simple test.If it is, then it has to follow “normal” issuance protocols.The SEC will give you a reading if you ask. When I was a public company CEO, my CFO was in frequent contact with the SEC. They are not the enemy unless you fail to do what they tell you to do.The Wells Procedure allows a company to explore in great detail the SEC’s objections and find a way out of the trap. You get to write them a Wells Response after they tell you how the cow is supposed to eat the cabbage. If you decide to ignore it, then you have to deal with an SEC in enforcement mode.Climate change is about science. I like to get my science from scientists. Right now, we are being asked to listen to politicians, alarmists, politicians, alarmists, and 16-year-old children. Call me when the scientists are getting ready to speak.I can’t remember how many years we have left, but I know it is only a few.JLMwww.themusingsofthebigredca…

          1. Richard

            One thing about Federal agencies they do tell you in advance that that are going to tell you, they tell you and they tell you that they told you. For all it’s faults, surprise regs are NOT part of the mode of doing business.

      3. jason wright

        The Treaty of Versailles was a bad deal.

  2. JamesHRH

    KIk was always on the very edge – first w a messaging system for teens, now w Kin.Pioneer or settler issue to be resolved.

  3. pointsnfigures

    “I have not yet begun to fight!”-John Paul Jones Always a hard decision. When you do you quit, when you you fight? It’s so individual there is no real generalization you can make. What if Slack would have quit? One in a million I know.

  4. Toby Lewis

    Great post on a pivotal moment in the entrepreneurial journey. Excellent they can make a play at the next evolution through crypto. Love the Foch quote.

    1. JamesHRH


    2. Girish Mehta

      The First Battle of the Marne from which this quote dates was fought very early at the outbreak of WWI (in the 1st-2nd week of Sep 1914, after war had broken out at the end of July) and was absolutely pivotal in bringing the Schlieffen plan to ruin.As a result of the First Battle of Marne, Germany was forced to do the one thing it wanted to avoid – fight a battle on two fronts simultaneously. It basically marked the end of the Schlieffen plan.It also ended all expectation of a short war. The battle of Marne was followed by 4 years of stalemate and attrition through trench warfare. In the end, the war would see nearly 10 million military personnel dead and almost as many civilian casualties.That horror was still to come, after the pivotal Battle of the Marne.

  5. William Mougayar

    Retreat, re-group and keep fighting with more agility. It was a hard decision, but the right one.

    1. Richard

      Is it true that KiK messenger was mostly used by the high school crowd for sexting ?

      1. William Mougayar

        I wasn’t associated with them in their early years, but I think that was behind them is the latter years. Best is to follow the history by googling as I am not sure.

  6. Richard

    Renee Gerard spoke about the power of the scapegoat to influence people. If only Twitter would have had a principled leader. Is there a way to turnoff twitter stories ? The Twitter team is drunk on stupidity.

  7. Tom Labus

    Always a very tough day to part with those you have fought with.Why, courage then! what cannot be avoided’Twere childish weakness to lament or fear. William Shakespeare

  8. awaldstein

    I’ve been there and want to restate the obvious.To the investors, the best ones, yes it is hard cause of the time and belief investment and the economic loss. But its one piece of a larger portfolio play.To the entrepreneur it is their life, their identity, X years of single focus.It’s truly a painful reality and a hard fall, especially with a large team to disband.There is no poetry in their lives the day after.

    1. Richard

      A bright guy once said something about insanity and Doing the same thing while expecting a different result …

  9. DJL

    After a while, the grinding becomes such a way of life that you can forget the other way. Sounds like a very prudent decision. If they have a cross-platform currency that is live and earning, it seems ripe for partnership.

  10. sigmaalgebra

    Okay: (i) I’m sorry. (ii) Here’s a box of Man Sized Kleenex. Since I’m sorry, this box is appropriate. (iii) Now that we have been sorry and dried off with a Man Sized box, again since we really were sorry, since we wanted something better, better than even Man Sized Kleenex, we have a question: How can we do better in the future?

    1. JLM


  11. JLM

    .Tough day.Field Marshal Foch’s actions at the Battle of the Marne ended up pushing the Germans back as they were closing on Paris. What followed was four years of trench warfare as the combatants settled into the worst kind of static warfare that stretched from Switzerland to the sea.The inability to fight a war of maneuver would result in 41MM casualties with 20MM KIA and 21MM WIA. Soldiers would die to the tune of 9.7MM and civilians to 10MM. Think about those numbers.The world would see the ugliness of trench warfare, poison gas, the supremacy of the machine gun over the infantryman, the importance of artillery (highest source of casualties on both sides), and the emergence of the tank. The American leadership for WWII at the General officer level was developed here, except for Eisenhower who never made it to the war.It would take four years, the withdrawal of the Russians, and the injection of American forces under Gen Black Jack Pershing for the Allies to bring the Germans to the bargaining table and what resulted was an armistice.Marshal Foch famously said: “This is not a peace. It is an armistice for 20 years.” He was absolutely correct almost to the day. WWII started 20 years and 65 days later.The WWI Armistice was signed in a railroad car at Versailles. It was Marshal Foch’s rail car. Hitler later made the French capitulate in WWII in the same rail car in the same location.It was a bad treaty (reminiscent of the Iran nuke treaty) and allowed the Germans to surreptitiously rearm in the 1930s because the Allies didn’t enforce it. Had the French, English, and Americans enforced the prohibitions against German rearmament under Hitler, WWiI arguably doesn’t happen.It was a shitty war, a worse armistice, and a truly lousy peace. Everybody knew what Hitler was doing and everybody was too lazy to do anything. The French Army was 20X the size of the Germans at this time and thought their vaunted Maginot Line protected them.In that WWI trench warfare fighting a Corporal named Adolph Hitler was wounded by gas. He never used poison gas in WWII.In 1940, Hitler captured Paris and Versailles. He had the rail car in which the WWI armistice was signed moved to Germany. All the monuments to the Allied victory were destroyed. There was a statue of Foch that he left there, but now it looked out onto a barren field all by itself.When the Allies prevailed in WWII, the French rebuilt the monuments at Versailles using German POW labor (something forbidden by the Geneva Conventions). They rebuilt it exactly as it had been.The Allies occupied Germany and peace prevailed until the present. It is important to recall that the US at the peak had three armies in occupied Germany. I served there some thirty years after the war. I ran into Germans who had served in the war as young men. They were with German armor units that were very good. The US occupying force of those days was bigger than the entire US Army of today.Foch was a strategic military thinker though he allowed a static war to occur on his watch. It became unfashionable to study his theories because of the outcome of WWI, but there is much to learn from him. The French, basking in the glory of Napoleon, were once considered the foremost military scientists of the world.He also said:”Airplanes are interesting toys, but of no military value.””The most powerful weapon on earth is the human soul on fire.””The will to conquer is the first condition of victory.””The laurels of victory are at the point of the enemy bayonets. They must be plucked there; they must be carried by a hand-to-hand fight if one really means to conquer.”JLMwww.themusingsofthebigredca…

    1. Richard

      No management handled their losses better than Japanese / Samurai handled their losses.

      1. JLM

        .Ouch.Suppuku to be done right must be performed in front of an audience.JLMwww.themusingsofthebigredca…

        1. Richard

          Between WeWork, Uber, Theranos, Etc, maybe its a part of the new term sheets from USV.

        2. Richard

          The Mikadohttps://youtu.be/fJV90bg9zps

      2. jason wright

        A culture that does not tolerate failure ultimately fails. All that learning… lost.

    2. Matt A. Myers

      “Hitler later made the French capitulate in WWII in the same rail car in the same location.”I never knew that – I bet that was a leading driver for Hitler.

      1. JLM

        .Hitler was a fucking maniac who told the world exactly what he intended to do in his book, Mein Kampf. People read it and didn’t take note or action.He was wounded in WWI by the French with poison gas and never allowed his army to use poison gas in WWII.He was obsessed by the humiliation of the Germans surrendering to the French in Marshal Foch’s rail car — little shit was an Austrian, not a German — in WWI.If the French, English, Americans had slapped the snot out of Hitler when they caught him re-arming Germany in the 1930s, there never would have been a WWII in Europe.There is a parallel in the world sitting by idly and allowing the iranians to develop rockets, export terrorism, and to sprint toward a nuclear bomb.There is not a single instance in history of a despot getting a weapon and not using it.JLMwww.themusingsofthebigredca…

        1. Moose Weatherman

          Except Zyklon B and other gasses against the Jews. Lest we forget.

          1. JLM

            .THAT’S A DAMN GOOD POINT, @mooseweatherman:disqusWell played.JLMwww.themusingsofthebigredca…

    3. James Ferguson @kWIQly

      @JLM:disqus Have to take issue here:>> He never used poison gas in WWII.You are of course referring only to the field of combat. (And I know this was mere oversight)After visits to Bergen Belsen, Auschwitz, Dachau etc the horrors that occurred to6M assorted Jews, Gypsies, Disabled People, Homosexuals and Political Dissidents (and others I will have overlooked) must be kept front and centre.This, I note particularly in light of current populist/nationalist and racist tendencies supported by the insular, ill-informed and insane on both dies of the pond and elsewhere.

      1. JLM

        .The Mooseman already beat you to the punch. Point taken. My fault.Nothing going on today is even remotely in the same league as the Nazis — though the Chinese are getting close.https://themusingsofthebigr…It is always good to recall that the Chinese Communists have killed a hundred million of their own countrymen while fleshing out their definition of “communism.” itg continues.There is absolutely nothing wrong with nationalism which — a matter of funding prioritization as to where nations should spend their wealth that is derived from their citizens’ pocketbooks.Why the Hell shouldn’t the taxpayers be first in line for any assistance derived from their taxes?The USA should prioritize its own citizens, veterans, homeless, those in poverty before it serves aliens even refugees.To the extent “populism” is the synonym politically of nationalism — same answer.Racism is never justified.I argue that we are neither ill-informed nor misinformed. In fact, we have more information than ever in the history of mankind.We have a keener view of what politicians are trying to do than ever before. When Sen Elizabeth Warren — who will win the Dem nomination — said she wanted to raise Social Security by $200 monthly, her pandering was obvious and apparent, if not appreciated.We need to know exactly this kind of info. American Seniors are the single most important voting bloc and the most strategically distributed (Florida).SS has an annual COLA adjustment BTW.JLMwww.themusingsofthebigredca…

  12. Michael Brill

    Wasn’t this decision made a couple years ago when Kik put its management focus and best technical resources on Kin and took them off their core business?

  13. jason wright

    …and today WeWork’s CEO is removed.

    1. JLM

      .Haha, I posted this today.https://themusingsofthebigr…I predicted he would not survive.JLMwww.themusingsofthebigredca…

      1. Matt A. Myers

        Well, I hope he survives…

        1. JLM

          .He quit about 30 minutes ago.I made my blog post and he quit.JLMwww.themusingsofthebigredca…

      2. sigmaalgebra

        Although I have not followed all of business journalism on the We Work case, it does appear likely that your posts on We Work were from a mountain top with clear air while all, 100%, of (the rest of) business journalism was at swamp level, sea level, or below.I’m reminded of a remark, IIRC, “Professional wrestling, journalism, and politics are all fake”. And apparently that applies as just another special case to business journalism via Bloomberg, WSJ, Financial Times, The Economist, CNBC, etc.Sick-o journalism, about as useful as last week’s discarded candy bar wrapper or a comic book if those still exist, can seem just normal things and nothing to be concerned about until see some fairly serious business problems such as We Work that could, should have been predicted — that you DID predict.So, what happened is that as the comic books shut down, all their writers went to journalism including business journalism and joined English majors, comic gag writers, wannabe novelists, and Hollywood screen writers — where rationality, common sense, real data, actual utility, grounding in fundamentals, reality etc. are all to be banished for posturing, catch-y, punch-y, fadish, stylish, above it all, via some synthetic fantasy world continuing narrative?

    2. Girish Mehta

      Scott Galloway was both right and early to call out Wework.

  14. Kirsten Lambertsen


  15. jonincanada

    Though it has always been hard to understand why a company based in Waterloo needs a huge injection of cash from a chinese company. In the end, it sounds like a sketchy messaging service anyways.

  16. creative group

    CONTRIBUTORS:When we posted a reliable news source stating that KIK was running out of money we received a rebuttal from Fred stating that it was a lie. Some how the KIK who is not running out of money is laying off people. Just not getting if it was intentional misrepresenting the financial condition of KIK or wishful thinking that KIK could turn around. Or as the recent posts have revealed faking it until they make it.The defend to the end on investments that are not financially street solvent is very unpalatable, unappetizing and uninviting. If a company is raising funding the books will be open to investors who leak it to the analyst and financial news organizations. KIK business model was not timely and should have been sold more than two years ago. The competitors ate KIK for lunch. It was plain over a year ago and it is actually playing out in front of our eyes no matter how it is framed now.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENTANT

  17. Mike

    In most cases, nobody accomplishes anything without a few scars to show for it. Perhaps this marks the starting point for even more promising ventures. Often seems to work that way.

  18. Kevin R Ricoy

    The Kin Ecosystem has a bright future. Sad to see Kik app shut down, I am a user myself, hurts to see.

  19. Mark Essel

    Still thinking about this – no chance for separating the business and selling off the IP/team for the messaging app which sounds useful if not profitable – maybe to one of the other BIG message app businesses?Laying off 90% of a company to pursue a new business sounds like a hail mary.

  20. Jose Paul Martin

    10 Years is a long time of focus. What do you do when everything is given away for free? What model really survives, especially when 80% of ad spend is wasted, when ad clicks don’t work any more… is there a better model that can sustain businesses?