[GabrielBianconi]

I'm the co-founder and CEO of TensorZero.

We started the company two and a half years ago, and raised $7.3m in 2024 (announced only almost a year later). We've spent less than half of this amount.

Earlier this week we came to the difficult decision to wind down the project. The open-source repository remains available on GitHub (Apache 2.0) but won't be actively maintained by the team moving forward.

[bel8]

Hi! First of all, congrats on getting much further than any of us will ever be able to dream. Having a well funded startup is no small feat.

Now one question that you probably get a lot and I must ask: why not pivot?

[iwontberude]

A distilled model for specific domains is both nearly free and commodity. There is no money in AI outsourcing businesses at scale. If anything you are just a cost center that companies want to squish because your value a negated by the amount of effort it takes to evaluate it’s effectiveness.

News like this is reinforcing the narrative that frontier models and AI outsourcing generally is on the way down.

[carterschonwald]

i had the very strange experience last week of a recruiter listing your org as an example client, and when i looked stuff up i saw the current state.

[cluckindan]

What did you spend the money on?

The other half goes where?

[GabrielBianconi]

Mostly salaries to support a small team.

We are returning the remaining capital to investors.

[herodoturtle]

Kudos to you and your team for not burning through the rest. Hope you have better luck with your next project.

[GabrielBianconi]

Thanks!

[maxnevermind]

I thought usually founders try to pivot till they run out of money. I wonder if that is good or bad for a serial entrepreneurs if they decide to shut it down instead of pivoting?

[mrandish]

Many founders do try serial pivots until the money's gone. An entrepreneur shutting down cleanly with half the runway still in the bank would be seen by future potential funders as a net positive. It's worse to grind through all the money trying increasingly extreme pivots away from the original.

It takes maturity and decisiveness to recognize when a startup's core idea isn't going to work. In cases where any pivot wide enough to get into different lane is essentially a whole other business, it's often better to just shut down. Even if the last desperate pivot starts to work, you often have some team members and investors who aren't a good fit for the new focus and, worse, the 'new' business that's finally starting to work is almost out of money and the cap table is messed up. It's usually better to shut it down and reboot cleanly.

Founders who've successfully raised millions and executed well are usually quite fundable, even if their first startup didn't work out. Sometimes the timing is wrong or the market evolves differently. The key is how well you think, execute and communicate through both the windup and the wind down.

[hn_throwaway_99]

I feel like pivoting got unwarranted hype in the 2010s or so, possibly because Slack was an outlier in how successful they were.

Major pivoting is almost always a really bad idea. (I admit I'm doing a bit of weaseling using the "major" qualifier, but when I searched for examples online, a lot of the ones that came back weren't major pivots, just slight refinements of focus to find better product market fit). Pivoting usually carries a lot of baggage - better to just give the money back and start afresh most of the time.

[latchkey]

He might not have had that choice. Investors can put money into a bank account, and just as easily take it out. This is what happened in the 2000 dotbomb.

[gtm1260]

not really true unless you raise on terrible terms.

[Barbing]

I’ve never heard of this before. Anyone know if it’s uncommon?

Familiar with creditors getting divvied in bankruptcies, but not refunds to investors… oh it’s because there’s never any money left when things wind down. (We hear of retail stores where employees discover closures posted on shop doors when reporting to work.)

[Schnitz]

This is super common with startups and is usually called an orderly shutdown. You don’t want to wait until you are insolvent, but stop when there is enough money left to pay all outstanding liabilities as well as the people that will shut down the business entity, do a final tax return and so on. Then whatever is left eventually gets paid back to investors, who usually have a liquidation preference requiring this as well. The alternative, running truly out of money, no one shutting down anything, a ghost entity that continues to accumulate taxes and penalties, creditors chasing whoever they can get a hold of, is much worse. Just because everyone quits doesn’t mean the entity ceases to exist.

[killingtime74]

Worse and also most likely illegal too (sometimes jail or ban on running companies). Depends on where you do it.

[overfeed]

> This is super common with startups and is usually called an orderly shutdown

Perhaps now, but during the Zero Interest Rate era, the received wisdom was founders ought to keep going until there bank account was empty, in the hope that they may salvage returns for investors. Vendors, partners, clients and employees would be screwed, naturally, but it didn't matter because VC preferred it because losing all the money in a desperate gamble was preferable to lending money to startups at 0%

[antonvs]

> the received wisdom was founders ought to keep going until there bank account was empty, in the hope that they may salvage returns for investors.

Amusing that they managed to create a business strategy that depends on the sunk cost fallacy being wrong.

[hn_throwaway_99]

It actually happens a lot. Sometimes founders may pivot when the original thesis isn't working out, but a lot of times the prudent thing to do is to just say that it didn't work out and return investors' money.

Honestly, I was close to flagging this story because the title is deliberately manipulative - it makes it sound like the founder did a rug pull. But I was really glad to see the founder come in to these comments and just say we tried, but the market shifted under us. Happens all the time.

[GabrielBianconi]

Thanks, that's exactly what happened.

The title is misleading unfortunately but that's how social media goes...

[GabrielBianconi]

It's pretty common. If a startup winds down before it runs out of money, it typically returns whatever is left to the investors. We didn't have any debt.

[QuantumNomad_]

When I was in university I unsuccessfully attempted to start a company with two other students. We had a small amount of capital from a single investor. We did not pay ourself any salary. We had spent money on incorporating the company and buying a couple of iPads, and not yet spent money on marketing etc.

When after a few months we accepted that it wasn’t going to work, our investor got basically all his money back.

It was pocket change amounts compared to the sums of money that they deal with in Silicon Valley. But the point is the same anyway, the investor got back basically everything.

[purple-leafy]

I had a similar thing happen, made a startup when I was 18 and incredibly dumb. Half my money and half an investors.

Ended up having to wind it down because it was a stupid idea and I realised quite quickly after spending money on it. Was a small amount of money but a lot for me. Luckily the investor never asked for money back.

Wound down my second one too but lost no money.

Then came into some money through a software sale about 7 years later, and offered to pay the first investor their full investment back, which was about half the money from the software sale (my only sale ever).

They really appreciated it but declined and instead said no, they want to invest in me AGAIN in the next one.

Felt really nice to have someone believe in you so much they would open themselves up to money risk again rather than take their initial investment back

[theendisney]

Education costs time and money.

It would be depressing if your first painting was your best work.

[Barbing]

Wonderful!

[mikeocool]

It’s not atypical when a startup figures out things aren’t going to work while there’s still money in the bank.

Early stage startups tend not to have a lot debt to pay off, because there aren’t many places willing to offer them much credit.

[faeyanpiraat]

Are there any lessons around the why which may be publicly shared ?

[GabrielBianconi]

There are many factors at play here but if I had to pick one... an open-source company has to find product market fit twice: first for the OSS project and again for a commercial product. The AI market moves very quickly so it's easy to take a step in the wrong direction and fall behind.

I might publish a long-form reflection when the dust settles.

[gavinray]

It might come off as trite, but I genuinely am sorry that things didn't pan out for you

Very early in my career I used to believe that I or anyone else could be a CEO.

It wasn't until working with tiny teams where the CEO/founders devoted everything in their life to the business -- often at the expense of hobbies, romantic relationships, and any shred of free time -- that I realized true CEOs are a rare breed.

When are you ask things like "what happens if the product fails?" the answer would always be "It won't."

They both relentlessly believe in, and put every ounce of energy toward, their vision because anything less would not suffice

Again as trite as it sounds, I empathize with these people in that to them losing their vision felt like losing something dearest to them

[Aurornis]

There’s a fallacy that successful companies are only successful because their CEO was a “rare breed” and that failed companies fail because their CEO didn’t have some innate quality.

This isn’t true. It’s easily shown to be not true by looking at all of the CEOs who had success with one endeavor and then failed all of their following startups, or the other way around.

A lot goes into founding a successful company. Not all of it is in anyone’s control. Not everything can be overcome by a CEO with powerful motivation.

Some times the market moves in ways nobody could have expected. I even worked at one startup that was destabilized and ultimately failed due to a natural disaster.

Looking back at the startups in my past, some of the worst CEOs were the ones who paraded around their ideals about failure not being an option or who pretended that they could get the company through anything through sheer force of their will and the power of their dream. One CEO who was all about “never give up, never surrender!” thinking ran the company into the ground because he refused to let us pivot after the initial idea didn’t get traction in the market but some other features were getting a lot of interest.

Some times knowing when to call it, move on to the next thing, and stop stringing your employees, investors, and customers along is an important CEO skill.

[theendisney]

I know one who spends the days seemingly not doing antthing. He spends like a month with his own thoughts and comes up with truly bizare things that work.

In one instance he raised the price of something by 1000 times without adding anything extra. His explaination was that it would build the right community. In his opinion people were to negative/sceptical and talked to much about what things cost.

Cost him 90% of the customers innitially then grew by 100ish%. As if some high end comedy the 90% said it was to expensive and that it would never work. The other 10% really needed to see what would happen.

[altmanaltman]

what do you mean a true "CEO"? Obviously there is a big difference between what someone like Satya Nadella does and what a CEO of a 10-person firm does.

In smaller startups, everyone is directly involved and has to punch above their weight to pull through, not just the CEO.

Also devoting everything in your life to one thing is not a mark of intelligence or skill. It is a mark of dedication but by itself means little.

And yeah, not everyone can be a CEO because most business fail very quickly. There is always an element of luck in those that survive.

But the idea that you devote 24x7 of your life hence you must be a good leader is not accurate. In fact, if you press this culture downstream, you'll tire your workers and the rest of the team.

[fennecbutt]

True CEO. An actual leader who takes responsibility.

I.e. Not the majority of celebrity CEOs with golden parachutes and underpaid employees. Only in the position thanks to "my dad knows his dad and we went to the same school" nods and winks. It is the objective truth for most executives.

[gavinray]

There are personality traits inherent to successful CEO's that are in-born.

For example: I cannot imagine being a successful touring live performer. I am an introvert, I keep a rigid schedule so travel throws everything off, can't keep myself awake very late...

Could I perform the functions of a live performer? Yes, though no matter how much I "tried" the mismatch between the job and my natural tendencies is a recipe for failure.

  > not everyone can be a CEO because most business fail very quickly

Not everyone can be a CEO because not everyone is cut out for it. If you think you could step into those shoes, you're either built different or delusional.

[screamingninja]

> For example: I cannot imagine being a successful touring live performer. I am an introvert, I keep a rigid schedule so travel throws everything off, can't keep myself awake very late...

These are not examples of in-born traits. While I agree that not everyone has the motivation to become a CEO, I would disagree that a person cannot learn and adapt.

[gopher_space]

> There are personality traits inherent to successful CEO's that are in-born.

The problem with your point of view is that "Love of cocaine" is one of them, it's near the top, and you'll never acknowledge the fact.

[james_marks]

> If you think you could step into those shoes, you're either built different or delusional.

Being a bit delusional is a critical quality of some CEOs, so the distinction hardly matters.

[windexh8er]

CEOs will often have unfavorable characteristics. From startups to billion dollar corporations I've experienced far fewer "genuine" CEOs than narcissistic assholes. The latter are so prevalent because they take the valuation of the company as one of their primary drivers. This means that, for them, removing any obstacle (customers included) is the path they will traverse.

I think the problems with "successful" CEOs don't paint the complete picture. Many CEOs come in after the hard work has been done and "final phase" CEOs enshittify the product and treat their partners and customers vastly differently than they did during their build phase. I experienced this first hand at Palo Alto Networks. At the time their second CEO (Mark McLaughlin) had just come into the org. Mark was one of those few genuine CEOs I experienced, probably one of the least narcissistic I've seen at that point in a young company's trajectory. However Nikesh Arora (Mark's successor) is a complete narcissistic asshole. I still talk to many in leadership there on the regular and the consistent theme is he's surely the reason PAN support and product quality has taken a dive compared to the engineering focus on product and customers back in the early 2010s.

There are a lot of papers surrounding CEOs and many look at the narcissistic angle [0][1][2]. The reality is a lot of these companies could operate just fine without a CEO. I find it hard to believe CEOs are even remotely worth their compensation packages given most of them have zero clue about the product or customs they serve anymore. This all flows back to the "shareholder value" bullshit the US economy is built on. If corporations had more restrictions in financial engineering maybe, just maybe, they'd actually try to better compete within their product/service space.

[0] https://www.gsb.stanford.edu/faculty-research/publications/n... [1] https://journals.sagepub.com/doi/10.1177/0149206319892678 [2] https://corpgov.law.harvard.edu/2021/10/25/are-narcissistic-...

[vasco]

https://en.wikipedia.org/wiki/No_true_Scotsman

[sdesol]

> first for the OSS project and again for a commercial product.

Is there a way to reach out to you as I would like to hear what you have to say about what I am working on. You can update your HN profile to include contact information or you can reach out to me using my HN profile.

I'm basically working on a portable intelligence layer for AI that I will be open sourcing and the commerical product will be to make the intelligence layer even smarter. I can share the Show HN post that I am working on that better explains the value proposition and would love to learn any lessons you have gained while trying to sell AI tools commerically.

Edit: In case somebody calls me out it. I didn't want to use the `tensorzero` email domain incase the domain was going to become defunct soon.

[DANmode]

He’s a cofounder,

and domains are cheap.

I’d shoot the note now if the feedback could be valuable.

[cbsmith]

Are there other OSS LLMOps projects that have overtaken you? I couldn't think of one.

[KennyBlanken]

> an open-source company has to find product market fit twice: first for the OSS project and again for a commercial product.

The only way this could be a 'lesson learned' is if you homehow managed to not pay any attention to what has been going on in the last 25 years with open source software companies.

[christoff12]

It's possible to personally learn lessons that have been documented or articulated elsewhere.

That's why it's called learning.

[beachy]

Not really - survivorship bias means that the open source companies you are referring to have all already passed the first hurdle.

[TheTaytay]

I'm really sorry to hear that, and I wish you and the rest of the team luck. When you first came out, I thought the approach was really solid - particularly with regards to structured inputs and outputs.

[ianm218]

Is there anything your willing to share on what went into the decision/ what you learned about trying to build this kind of product?

[GabrielBianconi]

See my sibling comment

[jacobgold]

Well, that explain things. Good luck on your next thing.