There had been an argument the previous week between me and my two co-founders as to when we should break the news. I voted for Friday and they for Monday.

"Never tell people on a Friday," they said. "It doesn't do them any good; they'll have a horrible weekend. If we tell them on Monday, then they have a fresh week in front of them to look for new jobs."

So our erstwhile employees were spared the horrible weekend, but I was not. The reality of what was happening to the company that I had worked 18 long months to build was finally sinking in. Our ambitious plans to change the ways in which people communicate online were not to be completed. They were thwarted, halted, aborted. I never thought that my company would be one of the unlucky ones; I was convinced that we were strong enough to withstand the backlash of dot-com paranoia and vanishing investors. I was wrong.

I lay awake at night, rehearsing the phrases we would use:

"As you know, we've been working on raising Series B funding for a couple of months now."

"Due to the horrible market conditions and the fact that we aren't at revenue yet, we haven't been able to raise the money needed to keep the company operating."

"We can't make the next pay period, so off you go."

I agonized over what the employees' reactions would be. I feared tears, outbursts of anger, accusations of leadership gone awry. I had watched the TV interviews with disgruntled employees of failed start-ups. I had read the message board postings of those freshly ejected from flailing new-economy businesses.

The disillusioned are not a happy bunch: They hiss about inexperienced management, worthless stock options and too much overtime. They're bitter because the rainbow they followed didn't lead to a pot of gold and now they have to retype their résumés and hit the road. They inevitably recall the job offer they should have accepted instead -- with a company whose IPO looked like a shoo-in.

They don't tell the interviewer about the Free Lunch Fridays, the fat health benefits or the liberal expense accounts. They fail to mention how seriously their input was valued and the myriad ways in which their ideas were empowered. Instead, they bellow and blame, anxious to share with the world how they've been wronged.

Vivid speculations abound as to what happens after a start-up closes. Rumors are spread about CEOs who get golden parachutes and entrepreneurs who leave with pocketfuls of cash. The laid-off worker imagines a scene in which the founder of a has-been company spins out of the parking lot in a new Porsche, singing "Satisfaction" and planning a vacation to the coast of Spain.

And so it was with great trepidation that I faced that Monday morning in October.

The Free Software Project
Read Andrew Leonard's book-in-progress on Linux and open source -- and post your comments.