Why Startups* Fail

*and other tech projects

Seven Fail Modes. And Some Successes.

successes (but nobody bats 1.000)

reasons for failure (self-reported)

source: cbinsights cbinsights.com/blog/startup-failure-post-mortem/

vision reality

reality will always win

most failure = non-alignment with reality

seven failure modes

➡ fails 1-5 : non-alignment with the real world

➡ fails 6 &7 : execution

To see what is in front of one's nose needs a constant struggle

“

George Orwell (would have enjoyed the Lean Startup)

“

classic fail 1 : too early

“This technology is so cool…”

too early : symptoms

the long-term strategy is great

but you’re doing a lot of persuading (a lot)

a few enthusiastic early adopters (head-fake)

obvious practical objections are waved away

traction just doesn’t happen

too early : why

in love with the theory, blind to the practicalities

too early : what to do

➡ plan and fund for a long (long) haul

➡ find a piece that will work (really work) now

➡ find a niche that will work (really work now

classic fail 2 : too late

hoping one or two “plus” features will move a market

hoping a giant grizzly won’t notice you’re there

assuming that you’re a bigger grizzly

“We can compete with Google because…”

too late : why

it’s probably a good idea, except for the competition

hubris: you’re going to disrupt a giant

thinking maybe you’re get acquired (maybe you will)

too late : what to do

➡ move really, really fast (see also: grizzly)

➡ be really massively disruptive (hard)

classic fail 3 : adhd

there is no one customer

everybody is really busy: product teams get burned

frequent bursts of optimism at “the new start”

the strategy gets increasingly convoluted

“we could be a <insert new idea here>”

adhd : why

disappointment of seeing reality meet the vision

fear of commitment to one goal

fear of letting go of a direction that has failed

adhd : what to do

➡ commit, and then cut stuff. yeah. that’s hard

➡ do one thing really well

classic fail 4 : the Big System

“we’ll get the architecture right this time”

the “why” explanations are convoluted: often justified by one feature, not by real user need

there are too many engineers

timescales keep drifting out into the future

the Big System : why

we are really attracted to “doing it right”

theory of what “a complete system” overrides practicality

the Big System : what to do

➡ ewww. tough one. just stop.

➡ isolate the customer need. address that. only.

classic fail 5 : not listening

customer responses are ignored or “re-interpreted”

Lean Startup, or anything like it, is not used

Lean Startup is kind of used: results are ignored

“we’ll put another feature in”

not listening : why

we’re gonna build what we’re gonna build

we’re attached to our creativity

not listening : what to do

➡ well, you could build it - you probably will anyway

➡ or: start listening. it’s hard. you don’t want to hear it.

classic fail 6: oops, forgot the marketing

there’s no marketing person in charge of marketing

no spreadsheet exists showing cost of user acquisition

“our investors will tweet this”

“techcrunch is going to love it”

oops, marketing : why

we love our products. surely other people will, too!

we see lots of success out there. surely it must be easy!

oops, marketing : what to do

➡ get expert help

➡ include a marketing plan in your runway (time and $)

➡ do this before you write any more code

classic fail 7: damn thing doesn’t work

damn thing : symptoms

two steps forward, at least one and a half back

bugs, performance issues

demos are a nightmare

continuous schedule overruns

damn thing : why

the tech is beyond (at least some of) the team

changing this means facing hard people issues

damn thing : what to do

➡ manage the hell out of it

➡ change (at least some of) the team (do this)

successes

➡ small, committed, excellent teams

➡ real world alignment : strategy/timing/customer fit

enjoy building your vision

joedunn@cloudbreak.com @startup2020

cloudbreakleadership.com