My startup shutdown horror story: A start up I briefly worked for during the dot-com bubble one day just ran out of money. I could see the writing on the wall, went to another dot-com (which also failed), but kept in touch with the people there. As they described it, the boss came in one day and told everyone “OK, the company has run out of money and is now closed. You will not get paid for the work you did in the last week, all medical and other benefits are now null and void, and good luck finding a new job.”
That's comparatively tame. My two startup shutdown stories (in both cases I left 1-2 years before they totally blew up and heard about it through former coworkers):
In one, the VCs came in, ousted all the management, installed their own highly-paid employees, and then promptly ran out of money. The technical cofounder stealth-bid (through an employee friend) against the VC for the company IP at the bankruptcy auction. The auction house messed up and told both parties that they'd won. Lawsuits started flying back and forth. The founder decided that rather than deal with this, he'd move to China with the IP, where they don't enforce IP laws, and start the exact same company with Chinese employees. The company failed for exactly the same reason the first one did, namely the technical founder's complete and utter inability to manage a production-quality project to completion.
In the other, the business cofounder quit, ran off with the customer list, contacted all their customers saying "Hey, I'm founding a new startup", a lawsuit was filed, and AFAIK both businesses failed.
I've been lucky that with my own startups, I've parted on amicable terms with all the cofounders I've worked with - though this is usually because we only gave up when it was clear neither of us wanted to do it anymore.
Hey I had this happen last week, but every non-exec was blindsided. In fact, I had to break the news to another engineer after he was just kicked from Slack/GH/etc with no explanation.
The video I'd love to see is "How to Shut Down a Startup"
>>>Until a few years ago, however, it seemed that, absent special circumstances like alter ego or failure to observe corporate formalities, courts in California would not impose personal liability for wage and hour claims on the key employees, directors, officers, or investors of a corporate entity.
