Why I'm Shutting Down My 5-Year Startup (Hard-Learned Lessons for Founders)
Don't let attachment blind you to reality.
Published September 17, 2025 • Based on Founder Reality Episode 18
Also available on: Apple Podcasts • Spotify • YouTube
After five years of building SimpleDirect financing—from my university days at Waterloo to today—I'm making the difficult decision to sunset the product. This isn't a story of failure, but one of hard-earned wisdom that I hope can help other founders avoid the same pitfalls.
The Real Cost of Founder Attachment
Building a startup is deeply personal. You pour your heart, soul, and years of your life into an idea. I've been attached to SimpleDirect since my sophomore year, watching it evolve through different teams, pivots, and iterations. But I've learned that founder attachment, while natural, can become your greatest liability.
The opportunity cost is enormous. I've watched brilliant founders—people with exceptional technical skills and business acumen—spend four to five years on products that never gained traction, simply because they couldn't let go of their "baby." The tragedy isn't that they failed; it's that they could have been building something transformative during those years.
Team confusion follows founder confusion. When you're attached to a product without clear principles, your roadmap becomes reactive. Our sprints turned into customer feature requests. We had no vision for where we'd be in three, six, or twelve months. We were building, but we weren't leading.
The Three Fatal Flaws That Killed Our Startup
- We Didn't Control the End-to-End Experience
This was our biggest mistake. SimpleDirect integrated with 13 different lending partners, each with their own APIs, policies, and customer experiences. Once we handed customers off to these partners, we lost all control.
The result? 99% of our support tickets came from issues on the partner side—problems we couldn't fix, experiences we couldn't control, and frustrated customers we couldn't help.
Compare this to companies like Basecamp, who built their own calendar, messaging system, and project management tools instead of integrating with Google Calendar, Gmail, and Slack. It sounds counterintuitive, but controlling the entire experience protects your business and keeps customers in your ecosystem.
Key lesson: Never base your business's success on external APIs you don't control. Build in-house for essential functions, use open-source for non-critical features, but minimize external dependencies at all costs.
- Wrong Product-Market Fit (Despite Having Customers)
We assumed home improvement contractors wanted sophisticated, web-based financing tools. We had customers using our product, which validated our assumption—or so we thought.
The reality? 70-80% of our target market didn't want apps or complex interfaces. They wanted simple phone calls and text messages. They wanted to be notified when customers got funded, not to learn a new system.
Key lesson: There's a difference between problem-solution fit and product-market fit. Having customers doesn't mean you have the right product if those customers aren't actually using what you've built.
- Revenue Model Vulnerability
Our commission-based model (1-2% per loan sold) seemed reasonable until one of our biggest lending partners cut commissions by 40-50% overnight with minimal notice. Our unit economics collapsed immediately, and there was nothing we could do about it.
Key lesson: If your revenue depends on external partners' policies, you're not building a business—you're running on hope.
Starting with Principles, Not Products
After studying companies like Basecamp—profitable for 25 years with $280M revenue and just 60-70 employees—I realize I built everything backwards. I started with an idea, validated it, and figured out principles later. This created an inevitable conflict between what I was building and what I believed in.
Basecamp's approach: They start with principles, then build products. They've said no to thousands of customer requests because those features didn't align with their core values. They actively fight feature bloat because complexity violates their principles.
My New Framework for Building
Moving forward, I'm adopting a principle-first approach. Before building anything, I ask:
- Do I control the end-to-end experience? Can a third party's failure destroy my product experience?
- Does this align with our values? Am I adding complexity just to look sophisticated?
- Are we building for customers or for ego? Do customers actually want this, or do I think it sounds impressive?
- Is the revenue model sustainable? Can I earn revenue directly from customers without depending on third parties?
What I Got Wrong (And What You Can Learn)
- I built first, found principles later → Start with clear principles and values
- I added complexity to appear sophisticated → Simple solutions often win
- I chased market opportunities and hype → Build from your strengths and values
- I made decisions based on competition → Focus on customer value instead
- I ignored what customers actually wanted → Match product sophistication to customer preferences
The Path Forward
Shutting down SimpleDirect isn't an ending—it's a beginning. I'm launching two new products built on these hard-learned principles. Sometimes the best business decision is knowing when to let go.
To my fellow founders: Don't let attachment blind you to reality. Don't build complex solutions for customers who prefer simple ones. And never, ever let your business depend on someone else's success.
The goal isn't to avoid failure—it's to fail fast, learn faster, and build something that truly serves your customers and aligns with your values.
What lessons have you learned from shutting down or pivoting your startup? I'd love to hear your thoughts—reach out to me on Twitter @GeorgePu or check out more founder stories at foundryreality.com.