Knowing When to Fold

A friend called me last week. Three years into his startup. Solid product, passionate team, decent traction. But the numbers don’t work. Customer acquisition is too expensive, the runway is getting short, and the market keeps moving in unexpected directions.

“Should I shut it down or push through?”

I didn’t have a clear answer. There’s no playbook for this.

Why Grit Became a Religion

We love persistence stories. The startup almost going bankrupt before the breakthrough. The founder rejected by every investor before finding the one believer.

The lesson seems obvious: if they’d quit, they’d have missed their success. Therefore, never quit.

But what about the founders who kept pushing and just… kept pushing? We don’t hear those stories. No glorified exit to make them newsworthy. Just quiet shutdowns and LinkedIn posts about “taking time to recharge.”

When I talk to founders about potentially shutting something down, there’s almost always shame. Like quitting means they weren’t tough enough.

But that’s not strategic thinking. The question shouldn’t be “am I tough enough to persist?” It should be “is persistence the right strategy given what I now know?”

Different questions entirely.

The Poker Player’s Insight

My friend’s question made me pull a book off the shelf: Quit: The Power of Knowing When to Walk Away by Annie Duke. I’d read it when it came out and really liked it, then mostly forgot about it. Turns out I needed to read it again.

Annie Duke spent two decades as a professional poker player, and her central insight: folding a good hand isn’t weakness - it’s often the smartest play. Strong hand, but the odds don’t favor winning the pot? Fold. Preserve resources for better opportunities.

Her framework: decide your quit criteria before you’re emotional. What signals would tell you this isn’t working? What metrics would indicate you should fold? Write them down. Actually check them.

This sounds obvious. But how many founders actually do it?

Most of us start optimistic, then adjust standards as we go. “We didn’t hit our customer target, but that’s because the market is different than we thought, so actually…” Six months later, same conversation, new rationalizations. (I’ve done this. You’ve probably done this. Everyone does.)

Duke calls this “escalation of commitment.” The more you’ve invested, the harder it becomes to evaluate objectively. Sunk costs aren’t just money. They’re identity, ego, the story you’ve told yourself and everyone else.

I saw this in mineral exploration, where every step - from data analysis to aerial surveys to drilling - costs exponentially more than the previous one. Companies that survived knew when to quit before the next expensive step. Startups work the same way: scaling a team or investing in go-to-market when fundamentals don't work just accelerates the burn.

Duke’s framework makes sense on paper. In practice? Much harder than it sounds.

What I’ve Actually Seen

Over the years I’ve watched both versions play out. Easy to see in hindsight. Much harder in the moment.

The founder who burned through two years on a pivot that made no sense. Everyone around him - advisors, early employees, remaining customers - could see it wasn’t working. He kept finding new reasons why “we just need three more months.” Those three months repeated eight times. At some point you’re not pivoting, you’re just hoping.

A portfolio company I worked with had a product that solved a real problem but couldn’t crack distribution. After eighteen months testing every channel, the unit economics just wouldn’t work. The founder decided to shut it down. Painful decision. But he returned remaining capital to investors, kept the team together, and pivoted to an adjacent problem they’d discovered while talking to customers. Two years later, that business is growing steadily.

Another founder I know had a product that seemed stuck. Slow growth, skeptical investors, mounting pressure. But her earliest users kept using the product, kept referring friends, kept asking when new features would ship. She ignored the noise and kept building for them. Eventually the market came around.

The difference? The founders who made good decisions - whether to quit or persist - were looking at the right signals. Though I’m never completely sure I can tell which signals matter until after the fact.

Warning Signs

Some patterns show up when founders are heading toward a necessary quit.

They keep redefining success. First it was 100 users by month six. Then “user engagement” when they hit 50. Then “strategic partnerships” when engagement flatlined. The goalposts just keep moving.

The market stays cold. But there’s nuance here: cold today isn’t the same as cold forever. Is the market saying “no” or “not yet”? Sometimes you’re early. Sometimes you’re wrong. Telling the difference requires honest assessment of whether the world is moving toward your solution or away from it.

They’ve rebuilt the core product three times. Iteration is good. Rebuilding from scratch repeatedly suggests you haven’t found what people actually want.

They dread investor updates. Not because of the work - because of the explaining. You know something’s off when the update is mostly excuses for why the metrics don’t tell the real story.

None of these signals alone means quit. But if several show up together, that’s probably worth a harder look and an honest conversation with a good friend or mentor.

When You Need Advice

But when you’re trying to get perspective on this, there’s a problem: the people you’d normally turn to for advice might not be able to help.

Here’s an uncomfortable truth: your investors and board often can’t give you objective advice about quitting.

Not because they’re bad people. Because their incentives aren’t aligned with yours. They’re playing a portfolio game. One company shutting down? That’s a write-off, but it frees their time to focus on winners. For you, this is your life. Your opportunity cost. Your years.

I’ve sat in board meetings where everyone knew the company wasn’t going to make it. But the conversation was still about “paths forward” and “scenarios for a turnaround.” Because saying “maybe you should shut this down” feels like giving up. Nobody wants to be that person.

As an advisor, I’ve learned to ask different questions. Not “what do you think you should do?” but “if you were starting today, knowing what you know now, would you start this company?” That question cuts through a lot of noise.

The most helpful board members I know track whether the founder is still learning and adapting, or just grinding. Learning means there’s value in continuing. Grinding without learning is just burning time.

Think It Through Early

The best founders I know have all quit something. A product direction. A market. A partnership. Sometimes an entire company.

What made them successful wasn’t their grit. It was their judgment about when to persist and when to redirect energy.

The founders I’ve seen make good quitting decisions - either way - had usually thought through their criteria before things got hard. Not obsessively, but clearly. Maybe it’s “If we can’t get to $50K MRR in 18 months with less than $500K spent.” Or “If only one in five people say they’d actually pay for it after 100 customer interviews.”

The specifics matter less than the exercise. You’re forcing yourself to think clearly about what success and failure actually look like before you’re in crisis mode. Then you check these every few months - not obsessively, but regularly enough to notice when you’ve crossed your own lines.

Duke frames this as your “quitting budget” - the opportunities you create by walking away at the right time. Every month you spend on something that won’t work is a month you’re not spending on something that might.

When founders actually hit their quit criteria and need to make the call: find three to five people who understand your business but have no financial stake in it. Not investors, not co-founders. Ask each independently: 'Should I keep pushing or redirect?' If most say redirect, listen to that. Not because they're smarter - they're just not in the middle of it.

Back to That Conversation

My friend and I spent an hour working through his quit criteria - the ones he’d set early on and mostly forgotten. Turned out he’d already hit several of them. The conversation wasn’t about whether he had enough grit. It was about whether the data supported continuing.

He hasn’t made his final decision yet. But he’s asking better questions now. Not “am I tough enough to stick with this?” but “what am I learning, and is it moving me toward something that works?”

Maybe that’s part of it.

Not just grit.

Judgment too.

But knowing that and doing it? Still two different things.

I help founders navigate strategy and funding decisions when the path isn’t clear.

If you’re there, let’s talk.