Why do 80% of businesses fail
Is failing purely by bad luck, or can it be avoided?
Startup is hard. Whatever the stats, arguing about the small stuff is pointless.
The main reasons startups fail are:
- Founder blow-ups
- Wrong founding team -> bozo explosion
- Too small market
- Wrong timing
- Messed up CAC vs LTV (How much you make vs acquisition cost)
- Lack of focus
- Doing the wrong thing
- Running out of runway
CB Insights reasons for failure
They studied 101 startup post-mortems and found these are the reasons for failure.
Take this with a pinch of salt, but you should pay attention to the reasons regardless to be aware of them.
Pre-empt Failure
There are a lot of things you can do to avoid failing, or at least mitigate it.
If you aren’t a nerd, you don’t know what to do.
I was out on a date last week with a model who is setting up a startup in sextech sector (it turned out).
I gave her some advice about how to start and she said “Well, I’ve spent a lot of money already. The tech is hard. So that would have been helpful before I started spending money.”
I still told her to get to market but to try to fail faster.
Failing fast is so key. Your idea is crap till it shows it can make money.
Remove your ego from your idea. View it as a test you are not committed to until the idea becomes something to commit to.
Realistically, you only get a AAA exit if you are a AAA person. Most people aren’t.
You can still make money as a Neanderthal, if you hammer away at the right thing, at the right time, in the right place.
The idiots you see are survivorship bias.
Eventually, a million monkeys will write the complete works of Shakespeare.
You can totally avoid failure.
You need to know a lot to know why things won’t work. I teach founders this all the time.
The thing is, sometimes crazy shit works and you don’t know why. That’s why I always keep an open mind….
So long as the fundamentals are there.
Read these to get smarter.
- Passion is over-rated. Build a better mousetrap instead
- Is there a structured approach to finding a great business idea for a new startup?
- The real reason launch a startup faster (not talked about)
- How do you validate a startup idea?
- Investible Founding Startup Teams
- How big can this get? Market sizing has killed many startup fundraises
- Your solution is not my business problem
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