Leaders of Dead Startups Share Reasons Why They Failed
An analysis of 101 essays penned by failed founders revealed that 42% of startups go under because their product isn't wanted by the market.
With every successful industry comes a disheartening rate of attrition. It's just the way it is. For example, an estimated 90% of Silicon Valley startups end in failure. When they do, many of the floundered companies' founders take to the web to pen post-mortems detailing where and why things went wrong. As Fortunes's Erin Griffith reports, a venture capital database called CB insights has analyzed 101 of these startup obituaries in order to pinpoint patterns.
From Griffith's piece:
"The number-one reason for failure, cited by 42% of polled startups, is the lack of a market need for their product.
That should be self-evident. If no one wants your product, your company isn’t going to succeed. But many startups build things people don’t want with the irrational hope that they’ll convince them otherwise."
That last part is key. Part of becoming an entrepreneur and venture capitalist in Silicon Valley is the hope that one day you'll latch onto a product that completely revolutionizes the way people do things. Where regular startups simply shoot for the stars, these kinds of innovations aim beyond. Griffith uses mobile phones as an example:
"People dismissed [them] as a novelty in [their] early days. Obviously, they are no longer a novelty. The late Apple co-founder Steve Jobs famously said, 'A lot of times, people don’t know what they want until you show it to them.' The problem is that entrepreneurs have taken that to heart. For every $19 billion company like Uber, the private transportation service, there are all manner of frivolous products that never evolve past the phase."
Griffith investigates some of the other big reasons from the graph above. One person she talked to calls "Running Out of Money" less a reason in and of itself and more a symptom of poor management. Another expert told her that startups founded alone tend to fail more often than those with co-founders. A lot of the reasons above can be collected beneath the umbrella of "Poor/Inadequate Leadership."
So if you're looking to join the fray and introduce your own company, be aware that the odds are against you. Do your best to practice good management and make sure your product satisfies the market. And if you do fail, know that it's not the end of the world. A lot of people have to fall before they're ready to rise.
Keep reading at Fortune.
Photo credit: KieferPix / Shutterstock
Graph credit: CB Insights via Fortune
Swipe right to make the connections that could change your career.
Swipe right. Match. Meet over coffee or set up a call.
No, we aren't talking about Tinder. Introducing Shapr, a free app that helps people with synergistic professional goals and skill sets easily meet and collaborate.
Thinking your life is worthwhile is correlated with a variety of positive outcomes.
- A new study finds that adults who feel their lives are meaningful have better health and life outcomes.
- Adults who felt their lives were worthwhile tended to be more social and had healthier habits.
- The findings could be used to help improve the health of older adults.
Even when they suffer costs in doing so.
- It's commonly thought that the suppression of female sexuality is perpetuated by either men or women.
- In a new study, researchers used economics games to observe how both genders treat sexually-available women.
- The results suggests that both sexes punish female promiscuity, though for different reasons and different levels of intensity.
Jeff Bezos, the founder of Amazon.com, explains his plan for success.
- Jeff Bezos had a clear vision for Amazon.com from the start.
- He was inspired by a statistic he learned while working at a hedge fund: In the '90s, web usage was growing at 2,300% a year.
- Bezos explains why books, in particular, make for a perfect item to sell on the internet.
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.