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if there was some reason for it to close that wasn't "we just ran out of money", etc, then people from that start up can get a bad reputation.
For example, Theranos. when Theranos went to hell, with their boss being indicted for fraud and shit... employees started having to explain what they did there, and that they weren't part of it, when applying to new places. compared to people who left before it happened... for them it was easier "Well, at the time, we believed in the product and we didn't know it was fake," somebody in branding might say. For others who stayed on until it shuttered completely... It might be difficult to explain why that is.
simply having a product that doesn't work out isn't difficult. But when that product is a total fraud, that's a different story. Or if there were rampant corruption, or some other sort of thing.
I'm not saying that's how it's going... just that, if it's going down hill, jumping ship now might make it easier to land a new position elsewhere. If the old hats are jumping ship... it's not a good sign. it means the company has burned through that loyalty. And depending on your field, waiting with everyone else might mean having to compete for with a dozen others for the same position. you don't necessarily need to make a decision now, but, if there are dream jobs, you might as well apply for them.
I feel bad for the people who've worked at companies like that. Obviously the "morally correct" option is to quit as soon as you find out what you've been "working on" is fake, but I imagine not everyone would have that choice, particularly the low level peeps. I feel like you'd probably end up having to write off the experience entirely and exclude it from your resume or fudge the dates or something to have much luck of getting hired elsewhere
IMO? The morally correct thing is to report them. But yeah. It definitely sucks.