Take It Behind the Barn (36-Month Rule)
If it isn't growing and profitable after 36 months, shoot it — your time is the asset.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 90%
O'Leary rejects the vague 'fail fast' buzzword and replaces it with a concrete rule: if after 36 months a business isn't growing, profitable, and clearly acquiring customers, take it behind the barn and shoot it. He personally prefers to kill things after 24 months, and says if you haven't figured out customer acquisition cost by around 15 months, it's going to fail. The logic is that time — not money — is your most valuable asset, and staying emotionally attached to a dead idea steals the energy and capital a new idea deserves. He respects founders who own the failure, wind it down honestly, and move on.
Origin
Across Shark Tank and 50-plus investments, O'Leary repeatedly met entrepreneurs in the fifth year of beating a dead horse, so emotionally attached they'd mortgage their parents' home to keep it alive. That pattern led him to codify a hard time-boxed kill rule and to prefer investing in founders who have already felt the sting of failure and moved on.
Core principles
- 01Time is an entrepreneur's most valuable asset, especially in your 20s and 30s.
- 02A venture that isn't growing, profitable, and clearly acquiring customers after 36 months should be killed.
- 03If a business hasn't figured out CAC by around 15 months, it's going to fail.
- 04Emotional attachment to a dying idea drains energy and money that a new idea deserves.
- 05Killing it honestly and quickly earns respect from investors and employees alike.
How to run it
- 1
Set the clock at launch
Give the venture a hard deadline — 36 months maximum, and O'Leary personally prefers 24 — by which it must be growing and profitable.
- 2
Check CAC at the 15-month mark
By around 15 months you should have figured out customer acquisition cost. If you haven't cracked how to acquire customers by then, the business is going to fail.
- 3
Apply the working definition honestly
Judge 'working' strictly: growing, profitable, and clearly able to acquire customers. Anything less is not working.
Watch out Don't let anyone talk you into 'just keep going' when the evidence says it's dead — it wastes everyone's time and money.
- 4
Kill it cleanly and move on
If the criteria aren't met, wind it down. Tell your employees the truth, give them the best severance package you can, and start your next idea.
Pro tip Admitting failure and owning it earns you real respect and frees your most valuable asset — time.
In the wild
O'Leary repeatedly meets entrepreneurs in their fifth year of a business that never took off, so emotionally attached they're prepared to bankrupt their parents by mortgaging the family home to keep it alive.
→ He counsels killing such ventures years earlier so the founder's time and capital go to a viable new idea instead.
Common mistakes
Confusing emotional attachment with commitment
Staying with a non-growing, unprofitable idea because you love it drains the time and money a better idea deserves.
Blaming external factors for the failure
Founders who cite the market, competitors, or China dumping instead of owning the failure never learn and never earn O'Leary's investment.
Is it for you?
Best for
Early-career founders deciding whether to persist with or kill a struggling venture.
Not ideal for
Deep-R&D or capital-intensive businesses with legitimately long paths to profitability.
From the transcript
“If after 36 months it's not working, and by working I mean it's growing and it's profitable and you clearly have figured out how to…”
“If in 15 months they haven't figured out CAC, customer acquisition, they're going to fail.”
From the episode
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