Why do startups fail? #2
Omar Mohout and Carine Lucas wrote the book 99 Reasons Why Startups Fail. The title speaks for itself: the book gives you 99 reasons why startups fail and how to avoid them. You can read the first four reasons in this article and the next five here below. Write them down if you are planning to become an entrepreneur!
5 reasons why startups fail
Just because you think it is a ‘great idea’ doesn’t mean it is. You could be wrong.
Pivot on feedback, not on assumption
Don’t seek validation from the wrong people, like friends, VCs, startup folks, bloggers, angels, etc. Go directly to your customers. And don’t believe your own PR. Confidence can help foster success. Arrogance and self-deception can be poison.
A value proposition or an event is never compelling enough for a buyer to actually commit to purchasing. Good sales people 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”. Another way to say this is talking about whether a product solves a mosquito bite (nice but not essential to solve), or a shark bite (absolutely must solve). Order the book to learn more about mosquito and shark bites.
Picking partners is in many cases one of the first decisions of an entrepreneur willing to launch a startup. It is also one of the most impactful choices, especially in terms of equity. Fred Wilson, founder of Union Square Venture said equity « reinforces that everyone is on the team, everyone is sharing in the gains, and everyone is a shareholder. »
Moreover, for first-time entrepreneurs, choosing partners comes with the risk of having limited self-awareness regarding the situation and an absence of a clear sense of what kind of people it will take to succeed (soft and hard skills, personality, commitment, etc.). Do due diligence on your co-founders - a sour relationship can kill an otherwise great startup.
With all the hype over entrepreneurship, the quantity of information has gone way up while the quality has gone way down. That means entrepreneurs are getting lots of bad advice from unqualified sources. Check the background and the profile of your sources. Don’t take everything they say for granted. A critical mind and some discernment are mandatory every step of the way.
Entrepreneurship requires unwavering confidence. You will plan, research, prep, and do everything you can to mitigate unnecessary risk-bordering paranoia. But in the end, you won’t know what’s out there until you actually go out and find it.