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Why startups fail, according to their founders

fortune.com

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Re: Why startups fail, according to their founders

#21

Post by JacobAldridge »

logicallee wrote: post #12
cubano wrote: post #11

Isn't it common knowledge nowadays that simple luck plays a really big part of of succeeding as a start-up? I only say this because of a recent video series I watched from Stanford (I think) where the speakers, all successful founders, drilled in that idea from the get-go.

>Isn't it common knowledge nowadays that simple luck plays a really big part of of succeeding as a start-up? It's not a contradiction. Refer to the chart in the article: http://fortunedotcom.files.wordpress.com/2014/09/unknown2-e1... Luck can be an important component, however , it doesn't mean it's not super-easy to identify an immediate cause of death in the absence of that luck. For example, let's suppose that you…

Good assessment - I can't imagine any credible startup founder saying their reason for failure was "we didn't get lucky", even though plenty of successful ones (but not all, as you observe) can point to moments or periods of good luck that helped them survive.

I continue to believe that luck is the meeting of preparation and opportunity - that doesn't guarantee you good luck or business success, but it sure beats building a business in a basement without talking to the market and hoping you get it right!

Re: Why startups fail, according to their founders

#22

Post by srid68 »

cubano wrote: post #11

Isn't it common knowledge nowadays that simple luck plays a really big part of of succeeding as a start-up? I only say this because of a recent video series I watched from Stanford (I think) where the speakers, all successful founders, drilled in that idea from the get-go.

Luck of Action? Luck of Perception/Observation? Luck of Perseverance/Never give up? Luck of Change?

Re: Why startups fail, according to their founders

#23

Post by superuser2 »

srid68 wrote: post #22
cubano wrote: post #11

Isn't it common knowledge nowadays that simple luck plays a really big part of of succeeding as a start-up? I only say this because of a recent video series I watched from Stanford (I think) where the speakers, all successful founders, drilled in that idea from the get-go.

Luck of Action? Luck of Perception/Observation? Luck of Perseverance/Never give up? Luck of Change?

This sounds like motivational speaker bullshit. Luck as in chance. Pure, random chance. You take bold action based on insightful perception and change in exactly the right ways and you will still fail.

Re: Why startups fail, according to their founders

#24

Post by cyberjunkie »

There are a lot of immature startups throwing away money in vulgar fashion without considering the consequences of it, the value of that money. Startups are run by relatively young folk. Unfortunately, there are few or no shortcuts to years of first-hand experience of learning things the hard way, something most startups don't seem to get. Startups on a daily basis should be governed by a slightly conservative, old-school, level-headed individual.

People need to take the Facebook movie this seriously, the same way many startups take the Steve Jobs' ideology.

Re: Why startups fail, according to their founders

#26

Post by tjradcliffe »

softdev12 wrote: post #5

I think this article has it backwards. I think that the default state for a startup is to fail. That even if you do almost everything right, you still have a high probability of failing. And that there should be a list of all the things that need to be done right in order to succeed, rather than listing all the reasons for failure. For example: 1) make a product that people want (vs. no market need) 2) attract invest…

This is an essentially perfect list. I take "have a great team" as implicit as you won't be able to do all those things without one.

Luck is a huge factor in success, and it plays into all those things in very direct ways. I've been involved in three failed startups (and one successful consultancy) and seen all those factors play out.

Timing and making a product enough people want (and are willing to pay for) are the two areas where luck plays the biggest role. Market validation is a huge issue for new technology, and it's surprisingly easy--with the best market intelligence you've got--to build something that not enough people want (yet) to make money.

And not all markets allow fast pivots or particularly small MVPs. Sometimes you don't know it isn't going to get picked up until it's too late to change course. In other cases there is simply no way to know if you should take a fairly good offer today and cash out, or not. It's easy to point to cases where founders turned down good offers and went on to make large multiples of them, and cases where founders turned down good offers and went broke.

It would be a very valuable exercise to gather up cases like that and present them in a business school context. My bet is that no one would be able to consistently make the right decision based on the information available at the time, which would make the role of luck unequivocal.

Re: Why startups fail, according to their founders

#27

Post by tjradcliffe »

softdev12 wrote: post #8
bjelkeman-again wrote: post #6

Earlier quoted context omitted.

I agree, but I think 7) a great team, is missing from that list. It really helps avoid problems with 1, 2, 4 and 5. For some markets, 3 media vitality, isn't required and if you get the other things right you need less luck.

right. 7) a great team is probably even more important than luck.

I've managed great teams in companies that have failed because they built a product for a market that turned out to mature at about 1% of the level it had been predicted to grow to.

It was a great product, delivered on time. It fulfilled a genuine need and it did it better than anything the competition had to offer. But the market wasn't there to sustain the company, and there was no reasonable way to know that far enough in advance to do anything difference.

This is the essence of luck. People hate that, but it's the truth.

Re: Why startups fail, according to their founders

#28

Post by npx »

tcannon wrote: post #19

Interesting that the article mentioned Jody Sherman. I've worked with him several times. He moved to LA after running a startup into the ground in SF, taking with him the last paychecks of those who he had lied to saying that their pay was just delayed due to a glitch. While on the plane heading to LA he used the in-flight phone to buy a Porsche (sight unseen) from a dealership using his investor's money that he pock…

In his defense, I bet this guy knew how to party.

Re: Why startups fail, according to their founders

#29

Post by epa »

dushonok wrote: post #17
bjelkeman-again wrote: post #6

Earlier quoted context omitted.

I agree, but I think 7) a great team, is missing from that list. It really helps avoid problems with 1, 2, 4 and 5. For some markets, 3 media vitality, isn't required and if you get the other things right you need less luck.

How would a great team help you to make money out of a product nobody wants? Market fit (#1) is the most important thing

They have the knowledge, collaboration, and commitment to change the concept and push on.

Re: Why startups fail, according to their founders

#30

Post by tcannon »

npx wrote: post #28
tcannon wrote: post #19

Interesting that the article mentioned Jody Sherman. I've worked with him several times. He moved to LA after running a startup into the ground in SF, taking with him the last paychecks of those who he had lied to saying that their pay was just delayed due to a glitch. While on the plane heading to LA he used the in-flight phone to buy a Porsche (sight unseen) from a dealership using his investor's money that he pock…

In his defense, I bet this guy knew how to party.

Astute observation. Read down to his trips to Guatamala to hang out with John McAfee and see if you can read between the lines as to what he invested in that didn't work out:

http://www.businessinsider.com/jody-sherman-ecomom-2013-4?op...

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