Why Startups Fail?

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I am putting together this as an analytical reference for multiple reasons. For one, it is a pity to see so many founders and investors do the post mortem on their own projects and companies, one for which they all had higher aspirations. This is possibly why we should have a semblance of their stories but more importantly we should at least know some lines which we draw when we setup a new business.

The stage at which a startup stands during the first year is a precarious one. A bit of overdoing here and there and the entire lever can topple or simply collapse. This is exactly why your initial stages are often the most trying and challenging because all the goals that you setup for your business get called out here. From a managerial perspective, it can be a nightmare which is also why it does well to read insights from people who have already gone and done similar things in the market. So let’s start off this list now.

Unrealistic goals

Let me point this out clearly, I do not mean that high ambitions are impossible to fulfill. Your yearly targets though need to be reflective of the current context of your startup. Set yourself to achieve sales 70% more than your marketing capacity and you are bound to fail. The investors look unfavorably, the partners are displeased and you might just read the eulogy of your own business.

We set very high goals for us when we raised our first investment in April 2013. As a startup, data is your best friend. Reviewing those goals at the end of the year, we realized that we have trailed behind on few of them. For us a team, we have always believed in chasing bigger dreams and not take up smaller challenges. Keeping up with that belief, we will be sunsetting Wishberg in coming days while we give time to our users to go through their accounts and wishes.

Non scalable business

GreenGar was a Vietnam based startup that managed to earn over 15 million downloads on their apps for iOS, if that’s not enough then they were the first Vietnamese startup to be invested in by Silicon Valley and yet one problem and predicament within their business model brought them down.

GreenGar’s workings were not flexible and they could not expand their business models further, whether that included reaching to a larger target audience or not is something which is debatable but for now this is an important lesson as to why investment and good products alone are not enough to run a startup successfully.

Declining Market

This is a little related to the point above but still very much different. As Disruptive Media was to find out that the state of the market is important otherwise you just turn away potential customers from your products. It is an important lesson to note, you may have a very good product and repertoire as a team but if that is not a fit with the market then the startup is doomed to fail.

Too many Bugs

This seems like too cheap a way to go. I mean when you’re working across applications or fronts then your expertise should be more than solid right? Wrong. Development is a tricky line of work because debugging software or an app from top to bottom is almost impossible to do so and yet the more complete it is the better is your ability to be able to deal with your clients or your customers.

Postrocket was another such company that being ambitious enough simply did not do enough tests on their workflow and their products which led to more bugs occurring. What further added insult to injury was the fact is that this was a company that was taken in by so many incubators so there is a lesson here.

Not enough feedback from customers

We didn’t spend enough time talking with customers and were rolling out features that I thought were great, but we didn’t gather enough input from clients. We didn’t realize it until it was too late. It’s easy to get tricked into thinking your thing is cool. You have to pay attention to your customers and adapt to their needs.

Those are Votertide’s words delivered by Jimmy Winters at the Omaha 1MC. The idea is as plain as day. You have to know what your customers need and want instead of going on assumptions and intuition alone. Of course incorporating those views is more varied but it’s important to be aware of your customer.

Lack of confidence

This is purely the dynamics of marketing and pitching talk. To investors and to customers if your business is not convincing and “selling” then it will suffer. There are a number of psychological facts to point that out in abundance. But what makes it more apparent is the number of CEOs or managers who had to call it quits on their companies or projects because of a continued drop in their own confidence and drive.

With each pitch following that period of doubt—whether it was to a girl at a party or an interested investor—my enthusiasm and perceived confidence dwindled.

In the months that followed I experienced vision’s kryptonite in the form of self-doubt. Like Superman, I bruised easily once my incredible abilities vanished. For almost six months I had been riding on an ecstasy that woke me up at 7AM every day and kept me up until well past midnight but in the absence of my drug—vision— I was as weak as a heroin-addict in search of his next hit.

Soon my company, customers and team became the victims of my lack of vision and I grew fearful. Fearful that the facade I had created would disappear and fearful that those around me would notice this lack of confidence.

I quote the above stated words from Skyrocket’s own on why their business failed the way it did. It seems a harsh way of putting it but that’s how it works. Your attitude towards things and towards work in general affects how your brand grows or does not. In truth, building a brand from scratch is tough work which is why you cannot and should not doubt yourself at least.

Love what you do

This goes without saying. Your startup is an extension of you: it is what you wanted to do so it should drive you as much as it personifies you. Pumodo realized halfway down the line that they were not interested in their own apps that they made. They were not in love with what they did and hence they pulled the plug

You can make a brilliant website out of it all that you want and you can even pitch the idea to a million dollars of investment but ultimately if the idea does not excite then it probably is not the one you should be working on. Considering everything; that is a grand lesson in itself.

Are you a startup owner? Consider the points above!

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12 Comments
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    • AvatarAnna Morrish
    • March 19, 2015
    Reply

    Unrealistic goals have a knock-on effect on confidence. It’s imperative that start-ups outline what they want to do and do it. They must be confident and agile, by encouraging conversations with leads, customers, and even competitors and partners.

    If a start-up has a budget, they must use it wisely, by doing smart advertising and marketing – If they don’t know how, they can hire someone to help.

    There are some great points raised here, but by far, you must love what you do.

    • AvatarAnna Morrish
    • March 19, 2015
    Reply

    Unrealistic goals have a knock-on effect on confidence. It’s imperative that start-ups outline what they want to do and do it. They must be confident and agile, by encouraging conversations with leads, customers, and even competitors and partners.

    If a start-up has a budget, they must use it wisely, by doing smart advertising and marketing – If they don’t know how, they can hire someone to help.

    There are some great points raised here, but by far, you must love what you do.

    • AvatarAnna Morrish
    • March 19, 2015
    Reply

    Unrealistic goals have a knock-on effect on confidence. It’s imperative that start-ups outline what they want to do and do it. They must be confident and agile, by encouraging conversations with leads, customers, and even competitors and partners.

    If a start-up has a budget, they must use it wisely, by doing smart advertising and marketing – If they don’t know how, they can hire someone to help.

    There are some great points raised here, but by far, you must love what you do.

  5. Reply

    Non-scalable is a problem. The worst thing is getting no business – the second worst is getting so much, so fast that it all falls apart.

    • Reply

      I can agree with you like anything.

      When I start my first ever business the problem was too much business and we honestly didn’t have any plan to manage customer base more than we were expecting which creates panic and it heavily affect our customer service and in the end everything falls apart.

      I believe in the business idea there is always a section of what will you do if the idea didn’t work and if the idea work more than your expectations.

      Thanks David, glad it makes you share your views on the post 🙂

  6. Reply

    Non-scalable is a problem. The worst thing is getting no business – the second worst is getting so much, so fast that it all falls apart.

    • Reply

      I can agree with you like anything.

      When I start my first ever business the problem was too much business and we honestly didn’t have any plan to manage customer base more than we were expecting which creates panic and it heavily affect our customer service and in the end everything falls apart.

      I believe in the business idea there is always a section of what will you do if the idea didn’t work and if the idea work more than your expectations.

      Thanks David, glad it makes you share your views on the post 🙂

  7. Reply

    Non-scalable is a problem. The worst thing is getting no business – the second worst is getting so much, so fast that it all falls apart.

    • Reply

      I can agree with you like anything.

      When I start my first ever business the problem was too much business and we honestly didn’t have any plan to manage customer base more than we were expecting which creates panic and it heavily affect our customer service and in the end everything falls apart.

      I believe in the business idea there is always a section of what will you do if the idea didn’t work and if the idea work more than your expectations.

      Thanks David, glad it makes you share your views on the post 🙂

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