Comments on: “Why your startup will fail” – Mandatory reading for any (aspiring) Entrepreneur

By: Nick Desbarats

Nick Desbarats — Mon, 05 Jan 2009 18:47:01 +0000

One of the most realistic accounts of being a startup entrepreneur that I’ve read. The natural follow-up would be a piece about “so why do we do it?”, expanding on his last paragraph.

I doubt it would be meaningful to aspiring or first-time entrepreneurs, though. No-one honestly believes that no-one’s listening until until they’re whacked with their first failed email campaign…

By: Scott Lake

Scott Lake — Sun, 04 Jan 2009 03:41:30 +0000

That was a good post but I could see where it was going right from the start. Everytime I read a reason why for your startup wont work, my mind automatically says “fuck that”. I guess that is the mindset of an entrepreneur. It doesnt matter how many things can cause you to fail, you just have to keep going.

By: Mark MacLeod (startupcfo)

Mark MacLeod (startupcfo) — Sat, 03 Jan 2009 19:03:25 +0000

Hey Scott,

I agree with most of Eric’s points. Still, just to mix things up, I posted my rebuttal:

http://startupcfo.ca/2009/01/why-your-startup-will-succeed.html

Mark

By: Jay Godse

Jay Godse — Sat, 03 Jan 2009 01:09:34 +0000

This post rings very true for the startups I have been involved in and observed. The reasons Eric stated bring great insight because I have not ever seen most of them articulated so clearly (with the notable exception of “Your’re going to run out of cash”).

I have observed another glaring common factor in failed startups. Most startups I have seen do not have a well-articulated target market. I will quote from the wisdom of Geoffrey Moore, Crossing the Chasm, chapter 2, page 28:

[a market is]
- a set of actual or potential customers
- for a given set of products or services
- who have a common set of needs or wants, and
- who reference each other when making a buying decision.

Just ask the key business leader of most startups and you’ll either get a blank stare or some hand-waving about how it’s obvious that a certain vaguely defined group badly needs the product or service they provide. As you drill down on the criteria, you quickly find out that one or more of these criteria that define a market is not true.

Most startups that are serious about business success have a set of actual or potential customers for a set of products or services (offered by the startup). Most of these startups, however don’t have a well-articulated and quantitative idea of how their product or service fills these needs and wants, and how it impacts (hopefully positively) their customers.

The last two criteria are hard to nail down because it means that the startup has to understand the operations of their market and how their product will impact their customers’ costs and revenues. That is a level of market diligence that is beyond most startups, usually through some combination of arrogance and ignorance. (I have been guilty of both, and will probably repeat it).

There have been successful startups that didn’t have their market defined, but they were successful because they were able to “discover” the market in time to succeed.