Questions

Why do Startups Fail?

I've read several materials on startup failures including posts by Paul Graham and Steve Blank on the topic. I'm curious what other reasons aside from lack of customer development, product market fit and co-founder problems. Anything to add? Thanks!

7answers

Biggest is probably the product-market fit. Is your product or service helping (enough) people solve a problem or fulfill a need?

This is the biggest question a startup is trying to answer. You have to answer this question within a "finite time" and with "limited resources".

So it really comes down to how focused a startup is in answering this question. If you lose focus with other stuff (co-founder issues, business cards, spending too much time making the product beautiful or whatever else) you are going to run out of time and resources and you have lost the game.

I interview some of the very successful digital entrepreneurs on the web that respond to questions like this. Check out the interviews here: http://treptalks.com


Answered 6 years ago

Poor hiring. I cannot stress enough that the people you hire represent your company and putting the wrong people in key roles will cause the business to collapse.


Answered 6 years ago

Many of the answers already provided are valid. Many startups fail because not enough people want, or will pay for, the product. Others fail because they are unable to generate enough revenue to sustain before they run out of money. In my experience I've also seen startups with great ideas and some traction (evidence of a product-market-message-fit) fail because the entrepreneur couldn't get out of his or her own way. Mindset is key. A willingness to iterate and pivot where necessary is key. A realization that you don't know what you don't know that you don't know as an entrepreneur - and the commitment to fill in the missing bits and pieces is essential.


Answered 4 years ago

Good question (because if you know why startups fail, you could minimize - not prevent - the risks of failing for the same reasons).
The best answer (to most questions) is the one based on data (not opinions) as the famous/funny quote goes: "I believe in GOD, all others must bring data". Therefore 'My' answer is based on research done by CBInsights in which they reviewed 101 postmortems of startups that failed and then deduced the top 20 reasons. Here's the link:
https://www.cbinsights.com/research/startup-failure-reasons-top/
Here's the top 10 reasons:
1. No market need.
2. Ran out of cash.
3. Not the right team (I would put this as #2 - opinion based on working with over 100 startups).
4. Get outcompeted.
5. Pricing / cost issues.
6. User unfriendly product (I would move more down the list)
7. Product without a business model (I would move this to #3)
8. Poor Marketing.
9. Ignore Customers (I think this is very similar to #1)
10. Product Mistimed.
Happy to help on any other issue you might have
Best of luck


Answered 5 months ago

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