Why Startups Fail

Reason 1: Market Problems

A major reason why companies fail, is that they run into the problem of their being little or no market for the product that they have built. Here are some common symptoms:

  • There is not a compelling enough value proposition, or compelling event, to cause the buyer to actually commit to purchasing. Good sales reps will tell you that to get an order in today’s tough conditions, you have to find buyers that have their “hair on fire”, or are “in extreme pain”. You also hear people talking about whether a product is a Vitamin (nice to have), or an Aspirin (must have).
  • The market timing is wrong. You could be ahead of your market by a few years, and they are not ready for your particular solution at this stage. For example when EqualLogic first launched their product, iSCSI was still very early, and it needed the arrival of VMWare which required a storage area network to do VMotion to really kick their market into gear. Fortunately they had the funding to last through the early years.
  • The market size of people that have pain, and have funds is simply not large enough

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Head Games: Ego and Entrepreneurial Failure

Entrepreneurial success hinges in large part on a founder’s mastery of psychology. This requires the ability to manage one’s responses to what Ben Horowitz calls “The Struggle,” that is, the emotional roller coaster of startup life. Paul DeJoe captures the ups and downs of being a startup CEO in a post reprinted in a book that I edited, Managing Startups: Best Blog Posts.

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Today my startup failed

No soft landing, no happy ending—we simply failed.

It’s been a long four year journey, full of highs and lows. I am simultaneously incredibly proud, and incredibly disappointed.

I’m incredibly proud of an amazing team and all that they have accomplished. Our most recent product, DrawQuest, is by all accounts a success. In the past year it’s been downloaded more than 1.4 million times, and is currently used by about 25,000 people a day, and 400,000 last month alone. Retention and engagement are great. And yet we still failed.

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51 StartUp Failure Post-Mortems

51 StartUp Failure Post-Mortems
No survivorship bias here. A compilation of startup failure post-mortems by founders and investors.

Dave McClure on finding success in failure

Dave McClure, founder of 500 Startups spoke at Startup Grind in Palo Alto on 8/2/12.

Micah Baldwin on Failure at Startup Mixology 2010

Micah Baldwin the CEO of Graphicly shares his advice, insights and perspectives on “Failure” at the Startup Mixology conference in Chicago, Illinois on October 28, 2010.

Starting up and failing with Mukund Mohan

I haven’t watched this so haven’t commented.

Startup Diaries – Episode 7

Not sure what’s going on here really. They seem to be making several points; none of which come across with any real clarity.

Startup Failure: A Step to Success

Lots of short anecdotes and advice from investors and founders on failure. THIS NEEDS MORE.

Jason Mendelson Talks About Startup Failure

Jason Mendleson gives a VCs perspective on failure and more. A lot of good practical advice on how to fail with dignity, dealing with creditors and investors.