Why startups fail?
5 unexpected reasons why your startup might fail even before you launch it
Most people who haven’t launched startup yet and gain their knowledge from business schools, YouTube videos, or insightful books believe that startups fail for obvious reasons:
- No product-market-fit
- Bad cash flow
- Founders conflict
- Too much investors dependency
- Bad/ slow-developing product (it = better competition because if there’s no competition even shitty products will work when customers need some solution to their pain).
There are great insights on all of these points in YC CEO Michael Siebel here.
However, if you ask founders who had failed their startups before, they’d name totally different reasons. As well as the lessons they’ve learned. Well, it’s great to know the official VC view on the problem. But practical advice is much more valuable.
1. Messy hiring process
Actually, investors know that the startup team is the key. They invest in teams, not the ideas. Founders know it too and try to showcase their credentials as much as they can (“2x founder”, “ex-Google”, etc.) But they rarely think this rule is applicable to all hires of the company, not only the founding teams. How on Earth can an intern in the Product Design department influence the destiny of the company?! But the secret is: in times of turbulence everyone matters, and the intern becomes as important as the CEO. What if these times won’t come? But they will. Not if, but when. Turbulence for the early-stage startup is everywhere, it’s in the air. Fast growth is turbulent. Unexpected circumstances (like pandemics) are turbulent. Changes introduced by authorities are extra turbulent. And in times like this, every member of the team has to own the process, take responsibility, make uncomfortable decisions.
We started Saleswhale over 4 years ago. Raised 5.3M, scaled. then covid struck, and we churned >75%. It was a mess. Before that, we had been growing fast. hiring people like crazy. We end up with no team. No connection. No viable strategy. When the pandemic struck everyone started to panic, and all operations were virtually…