2019
The Top 20 Reasons
Startups Fail
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The Top 20 Reasons Startups Fail
Table of Contents
#20: FAILURE TO PIVOT


6
#19: BURNOUT



8
#18: DIDN’T USE NETWORK


10
#17: LEGAL CHALLENGES


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#16: NO FINANCING / INVESTOR INTEREST
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#15: FAILED GEOGRAPHICAL EXPANSION
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#14: LACK PASSION



17
#13: PIVOT GONE BAD



19
#12: DISHARMONY AMONG TEAM / INVESTORS
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#11: LOSE FOCUS



23
#10: PRODUCT MISTIMED


25
#9: IGNORE CUSTOMERS


27
#8: POOR MARKETING



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#7: PRODUCT WITHOUT A BUSINESS MODEL
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#6: USER UN-FRIENDLY PRODUCT

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#5: PRICING / COST ISSUES


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#4: GET OUTCOMPETED


34
#3: NOT THE RIGHT TEAM


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#2: RAN OUT OF CASH



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#1: NO MARKET NEED



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The Top 20 Reasons Startups Fail
After we compiled our list of startup failure post-mortems, one of
the most frequent requests we got was to use these posts to figure
out the main reasons startups failed.
Startups, corporations, investors, economic development folks,
academics, and journalists all wanted some insight into the question:
“WHAT ARE THE REASONS STARTUPS FAIL?”
So we gave those post-mortems the CB Insights’ data treatment
to see if we could answer this question.
After reading through every single of the 101 postmortems, we’ve
learned there is rarely one reason for a single startup’s failure.
However, we did begin to see a pattern to these stories.
And so after sifting through the post-mortems, we identified the
top 20 reasons startups failed.
Since many startups offered multiple reasons for their failure,
you’ll see the chart highlighting the top 20 reasons doesn’t add up
to 100% (it far exceeds it).
Following the chart is an explanation of each reason and relevant
examples from the postmortems.
From lack of product-market fit to
disharmony on the team, we break down
the top 20 reasons for startup failure by
analyzing 101 startup failure post-mortems.
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The Top 20 Reasons Startups Fail
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The Top 20 Reasons Startups Fail
There is certainly no survivorship bias here. But many very relevant
lessons for anyone in the entrepreneurial ecosystem.
It’s worth noting that this type of data-driven analysis would
not be possible without a number of founders being courageous
enough to share stories of their startup’s demise with the world.
So a big thank you to them.
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The Top 20 Reasons Startups Fail
Not pivoting away or quickly enough from a bad product, a bad
hire, or a bad decision was cited as a reason for failure in 7% of
the post mortems. Dwelling or being married to a bad idea can sap
resources and money as well as leave employees frustrated by a
lack of progress.
Imercive is one company that went under due to a failure to pivot.
The company, which shut down in 2009, originally intended to let
people order from local restaurants via instant messages.
After that concept proved too difficult and expensive to be
functional, founder Keith Nowak decided to think bigger. Instant
messaging could be used to help people interact with all kinds of
businesses, not just restaurants — and in turn, it would help those
businesses interact better with their customers.
But by the time Nowak recognized this new, bigger opportunity,
Imercive had already spent most of the money from its seed round.
Without any results to show for it, nor any proof that the new
vision could gain traction, the company had to close down.
#20: Failure to pivot
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The Top 20 Reasons Startups Fail
As Keith Nowak writes in Imercive’s post-mortem:
“We were caught mid-pivot – half way between a
strategy we knew wouldn’t work and one which we
believed could be successful but was not able to be
aggressively pursued. This was a very difficult place
to be both professionally and personally. We were
extremely frustrated at not being able to properly
go after our new strategy and every day that passed
without meaningful progress was one step closer to
the failure of my first company. Even though we put
everything we had into getting through this phase we
were never able to make it through the pivot.”
However, some say pivoting isn’t always the answer. Union Square
Ventures’ Fred Wilson wrote in a 2018 blog post that the concept
of pivoting out of a bad startup idea is overrated, and that often it’s
better to just let a bad idea fail:
“There is nothing I dislike more than carrying on with
something when I’ve lost interest, and worse, the
founders have lost interest. So my view is if you’ve
failed, accept it, announce it, and deal with it. Shut the
business down, give back the cash, and rip up the cap
table. Then do whatever you want to do next. If it is
another startup, do it from scratch and keep as much
of it as you can. If it is something else, well then do
that too.”
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The Top 20 Reasons Startups Fail
Work-life balance is not something that startup founders often get,
so the risk of burning out is high. Burnout was given as a reason
for failure 8% of the time. The ability to cut your losses where
necessary and redirect your efforts when you see a dead end was
deemed important to succeeding and avoiding burnout, as was
having a solid, diverse, and driven team so that responsibilities can
be shared.
What can make conversations about burnout difficult, especially in
Silicon Valley, is the widespread belief that building a successful
company will always involve some degree of possibly hazardous
overwork. As Uber board member and CEO of Thrive Global
Arianna Huffington puts it:
“The prevalent view of startup founders in Silicon Valley
is a delusion that in order to succeed, in order to build a
high-growth company, you need to burn out.”
#19: Burnout
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The Top 20 Reasons Startups Fail
At the same time, various founders have spoken up about how
damaging burnout can be. Former Zenefits CEO Parker Conrad
has said,
“I think people are unprepared for how hard and awful it
is going to be to start a company. I certainly was.”
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The Top 20 Reasons Startups Fail
We often hear about startup entrepreneurs lamenting their lack of
network or investor connections, so we were surprised to see that
one of the reasons for failure was entrepreneurs who said they did
not properly utilize their own network.
As Kiko wrote,
“Get your investors involved. Your investors are there to
help you. Get them involved from the start, and don’t be
afraid to ask for help. I think we made the mistake early
on of trying to do (and know) everything ourselves,
perhaps out of insecurity over being so new to the
business world. This is a mistake.”
#18: Didn’t use network
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The Top 20 Reasons Startups Fail
Sometimes a startup can evolve from a simple idea and enter a
world of legal complexities that can ultimately shut it down.
For example, Decide.com launched in 2011 as a tool to help
people predict when the prices of certain consumer goods would
change. Alongside listed prices for products from major retailers
like Target and Best Buy, Decide.com included the price of an item
on Amazon. As the company wrote in its post-mortem, Amazon
wasn’t happy with that:
“We received a notice from them informing us we
weren’t compliant and unless we removed it they’d
suspend our affiliate account. We weren’t making a lot
of money but that account probably represented more
than 80% our revenue.”
#17: Legal Challenges
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The Top 20 Reasons Startups Fail
Various music startup post-mortems also associated the high
costs of dealing with record labels and legal headaches as a
reason for startup failure.
High-profile startup Turntable.fm wrote,
“Ultimately, I didn’t heed the lessons of so many failed
music startups. It’s an incredibly expensive venture to
pursue and a hard industry to work with. We spent more
than a quarter of our cash on lawyers, royalties and
services related to supporting music. It’s restrictive.
We had to shut down our growth because we couldn’t
launch internationally.”
Smart luggage manufacturer Bluesmart also fell victim to legal
challenges. The company shut down in 2018 after most major US
airlines enacted a policy requiring all airline travelers to remove
lithium-ion batteries from their checked luggage:
“We have bittersweet news to share. The changes in
policies announced by several major airlines at the
end of last year—the banning of smart luggage with
non-removable batteries—put our company in an
irreversibly difficult financial and business situation.
After exploring all the possible options for pivoting and
moving forward, the company was finally forced to wind
down its operations and explore disposition options,
unable to continue operating as an independent entity.”
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The Top 20 Reasons Startups Fail


Tying to the more common reason of running out of cash, a
number of startup founders explicitly cited a lack of investor
interest either at the seed follow-on stage (the Series A Crunch)
or at all.
Smart earbud startup Doppler took hundreds of meetings to try
to raise the necessary capital, but investors just didn’t seem to
believe in the general market:
“The market has shifted remarkably for hardware. We
are incredibly bullish on the Here Two, and the OTC
Hearing Aid Act has passed, but we need real capital
to do it. The feedback we continually got is, ‘we are
not investing in hardware, and we especially are not
investing in hardware at these numbers.’ It’s too high a
risk even for the Valley.”
#16: No financing / investor interest
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The Top 20 Reasons Startups Fail
A similar fate befell the “real time reconnaissance platform”
Shnergle, which shut down in 2013 due to an insufficient amount
of available “risk capital” in its geographic region:
“Does your idea only monetise at scale? If your idea
can only be monetised at scale, head to San Francisco /
Silicon Valley. There isn’t enough risk capital, or enough
risk appetite, in the UK/EU venture market to pour
capital into unproven R&D concepts. If you want to build
in the UK, find some way of charging money from day
one. You can still use a freemium structure to up-sell
later. Shnergle was never going to monetise before it
had scaled fairly significantly. Fail!”
Lastly, sometimes companies can’t raise the money they need is
because one of their competitors already did. This was the case
for Sidecar, which raised more than $35M for its ride-sharing and
B2B delivery service before being forced to sell to GM in 2016:
“In short, we were forced to shut down operations
and sell. We were unable to compete against Uber,
a company that raised more capital than any other
in history and is infamous for its anti-competitive
behavior. The legacy of Sidecar is that we out-innovated
Uber but still failed to win the market. We failed – for
the most part – because Uber is willing to win at any
cost and they have practically limitless capital to do it.”
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The Top 20 Reasons Startups Fail
Location was an issue in a couple of different ways. The first was
that there has to be congruence between your startup’s concept
and location.
As the location-aware instant messaging service Meetro wrote,
“We launched our product and got all of our friends in
Chicago on it. We then had the largest papers in the
area do nice detailed write-ups on us. Things were
going great …The problem we would soon find out
was that having hundreds of active users in Chicago
didn’t mean that you would have even two active
users in Milwaukee, less than a hundred miles away,
not to mention any in New York or San Francisco. The
software and concept simply didn’t scale beyond its
physical borders.”
#15: Failed geographical expansion
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The Top 20 Reasons Startups Fail
Location also played a role in failure for remote teams. The key
being that if your team is working remotely, make sure you find
effective communication methods, otherwise lack of teamwork
and planning could lead to failure.
As Devver wrote,
“The most significant drawback to a remote team is the
administrative hassle. It’s a pain to manage payroll,
unemployment, insurance, etc in one state … for a small
team, it was a major annoyance and distraction.”
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The Top 20 Reasons Startups Fail
There are many good ideas out there in the world, but 9% of
startup post-mortem founders found that a lack of passion for a
domain and a lack of knowledge of a domain were key reasons for
failure no matter how good an idea is.
In NewsTilt’s post-mortem, the team candidly spoke about their
lack of interest in the domain they selected:
“I think it’s fair to say we didn’t really care about
journalism. We started by building a commenting
product which came from my desire for the perfect
commenting system for my blog. This turned into
designing the best damn commenting system
ever, which led to figuring out an ideal customer:
newspapers…
#14: Lack of passion
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The Top 20 Reasons Startups Fail
“But we didn’t really care about journalism, and weren’t
even avid news readers. If the first thing we did every
day was go to news.bbc.co.uk, we should have been
making this product. But even when we had NewsTilt,
it wasn’t my go-to place to be entertained, that was
still Hacker News and Reddit. And how could we build a
product that we were only interested in from a business
perspective.”
Doughbies, which raised $670,000 for an on-demand cookie
delivery service in 2013, also failed because of a lack of interest
from its founders and team. The company appeared to be doing
well, with 36% gross margins and 12% net profit at the time it shut
down. The problem, as CEO Daniel Conway put it, was that there
wasn’t massive growth or enough interest in running the business:
“Ultimately we shut down because our team is ready to
move on to something new.”
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The Top 20 Reasons Startups Fail
Pivots like Burbn to Instagram or ThePoint to Groupon can go
extraordinarily well. Or they can start you down the wrong road.
As Flowtab’s post-mortem explains,
“Pivoting for pivoting’s sake is worthless. It should
be a calculated affair, where changes to the business
model are made, hypotheses are tested, and results are
measured. Otherwise, you can’t learn anything.”
For David Hyman, the founder of Blin.gy, a last-ditch attempt to
save his startup from failure led him to pivot:
“Blin.gy was a pivot from our earlier app, Chosen, which
attempted to gamify the performance competition
space… We came up with a fresh take on the plethora of
AR-style apps that create visual effects based on face
detection and tracking.”
#13: Pivot gone bad
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The Top 20 Reasons Startups Fail
In the end, the new direction didn’t save the company:
“[Poor user experience] had a big impact on our
retention metrics. We needed 40% day-one returns and
were closer to 25%. The clock kept ticking… We set up
18 VC meetings and hit the road, hard. The feedback
was eye-opening and generally the same: ‘Really great
technology and vision. But how does this become a
platform?’… We didn’t have a compelling answer.”
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The Top 20 Reasons Startups Fail
Discord with a cofounder was a fatal issue for startup post-
mortem companies. But acrimony isn’t limited to the founding
team, and when things go bad with an investor, it can get ugly
pretty quickly as evidenced in the case of ArsDigita.
Phillip Greenspun writes:
“For roughly one year Peter Bloom (General Atlantic),
Chip Hazard (Greylock), and Allen Shaheen (CEO)
exercised absolute power over ArsDigita Corporation.
During this year they:
1. spent $20 million to get back to the same revenue
that I had when I was CEO
2. declined Microsoft’s offer (summer 2000) to be the first
enterprise software company with a .NET product …
3. deprecated the old feature-complete product (ACS
3.4) before finishing the new product (ACS 4.x) …
#12: Disharmony among team / investors
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The Top 20 Reasons Startups Fail
4. created a vastly higher cost structure; I had 80
people mostly on base salaries under $100,000 and
was bringing in revenue at the rate of $20 million
annually. The ArsDigita of Greylock, General Atlantic,
and Allen had nearly 200 with lots of new executive
positions at $200,000 or over …
5. surrendered market leadership and thought leadership”
At Pellion Technologies, the end came more quietly, as its major
backer Khosla Ventures lost faith in the company’s ability to execute:
“According to former employees, all of whom requested
anonymity, Khosla Ventures lost confidence that Pellion
could make enough money serving a niche market.
The lithium-metal technology worked for products
like drones, but the big money in the battery world is
in the automotive sector. Investors weren’t willing
to sink the money needed to develop the battery for
electric vehicles.”
In March 2019, Khosla decided the company would be shut down,
and removed Pellion’s name from its online firm portfolio.
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The Top 20 Reasons Startups Fail
Getting sidetracked by distracting projects, personal issues, and/
or general loss of focus was mentioned in 13% of stories as a
contributor to failure.
As MyFavorites wrote at the end of its startup experience,
“Ultimately when we came back from SXSW, we all
started losing interest, the team was all wondering
where this was eventually going, and I was wondering
if I even wanted to run a startup, have investors, have
the responsibility of employees and answering to a
board of investors.”
#11: Lose focus
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The Top 20 Reasons Startups Fail
Similarly, the post-mortem for e-commerce startup DoneByNone,
cites a lack of focus and its effect on the customer experienced as
reasons for the company’s demise:
“Here’s the long story: we’re a small start-up, and as
you can imagine, life has been quite tough for small
e-commerce retailers – and we went to hell and
hopefully are on our way back from there. While we were
focusing on other things that needed solving, we took
our eyes off you and your issues.”
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The Top 20 Reasons Startups Fail
If you release your product too early, users may write it off as not
good enough and getting them back may be difficult if their first
impression of you is negative. And if you release your product
too late, you may have missed your window of opportunity in
the market.
As a Calxeda employee said,
“In [Calxeda’s] case, we moved faster than our
customers could move. We moved with tech that
wasn’t really ready for them – ie, with 32-bit when they
wanted 64-bit. We moved when the operating-system
environment was still being fleshed out – [Ubuntu Linux
maker] Canonical is all right, but where is Red Hat? We
were too early.”
#10: Product mistimed
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The Top 20 Reasons Startups Fail
VR platform Vreal intended to build a virtual reality space for video
game streamers to hang out with their viewers and raised almost
$12M in its 2018 Series A. However, the available hardware and
bandwidth capabilities didn’t evolve as fast as the company had
expected, and though it delivered on its promise, Vreal struggled to
attract any significant usage:
“Unfortunately, the VR market never developed as
quickly as we all had hoped, and we were definitely
ahead of our time. As a result, Vreal is shutting down
operations and our wonderful team members are
moving on to other opportunities.”
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The Top 20 Reasons Startups Fail
Ignoring users is a tried and true way to fail. Tunnel vision and not
gathering user feedback are fatal flaws for most startups.
For instance, eCrowds, a web content management system
company, said,
“We spent way too much time building [our product] for
ourselves and not getting feedback from prospects — it’s
easy to get tunnel vision. I’d recommend not going more
than two or three months from the initial start to getting
in the hands of prospects that are truly objective.”
Similarly, VoterTide wrote,
“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.”
#9: Ignore customers
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The Top 20 Reasons Startups Fail
Knowing your target audience and knowing how to get their
attention and convert them to leads and ultimately customers is
one of the most important skills of a successful business. But
an inability to market was a common failure especially among
founders who liked to code or build product but who didn’t relish
the idea of promoting the product.
As Overto wrote,
“Thin line between life and death of internet service
is a number of users. For the initial period of time the
numbers were growing systematically. Then we hit the
ceiling of what we could achieve effortlessly. It was a
time to do some marketing. Unfortunately no one of us
was skilled in that area. Even worse, no one had enough
time to fill the gap. That would be another stopper if we
dealt with the problems mentioned above.”
#8: Poor marketing
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The Top 20 Reasons Startups Fail
Most failed founders agree that a business model is important –
staying wedded to a single channel or failing to find ways to make
money at scale left investors hesitant and founders unable to
capitalize on any traction gained.
As Tutorspree wrote,
“Although we achieved a lot with Tutorspree, we failed
to create a scalable business … Tutorspree didn’t scale
because we were single channel dependent and that
channel shifted on us radically and suddenly. SEO was
baked into our model from the start, and it became
increasingly important to the business as we grew and
evolved. In our early days, and during Y Combinator,
we didn’t have money to spend on acquisition. SEO was
free so we focused on it and got good at it.”
#7: Product without a business model
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The Top 20 Reasons Startups Fail
At Aria Insights, the concept of outfitting drones with sensors to
collect data from extreme environments seemed promising. But
while the company got off the ground and found a few high-profile
investors — including Bessemer Venture Partners — it ultimately
couldn’t find a compelling use for that data, and therefore couldn’t
adequately monetize its business model:
“CyPhy Works rebranded as Aria Insights in January
2019 to focus more on using artificial intelligence
and machine learning to help analyze data collected
by drones. ‘A number of our partners were collecting
and housing massive amounts of information with our
drones, but there was no service in the industry to
quickly and efficiently turn that data into actionable
insights,’ Lance Vanden Brook, former CyPhy and
current Aria CEO said at the time of the rebranding.”
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The Top 20 Reasons Startups Fail
Bad things happen when you ignore what a users wants and need,
whether consciously or accidentally.
Here’s what GameLayers wrote on their product UI,
“Ultimately I believe PMOG lacked too much core game
compulsion to drive enthusiastic mass adoption. The
concept of “leave a trail of playful web annotations” was
too abstruse for the bulk of folks to take up. Looking
back I believe we needed to clear the decks, swallow our
pride, and make something that was easier to have fun
with, within the first few moments of interaction.”
#6: User un-friendly product
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The Top 20 Reasons Startups Fail
Pricing is a dark art when it comes to startup success, and startup
post-mortems highlight the difficulty in pricing a product high enough
to eventually cover costs but low enough to bring in customers.
Delight IO saw this struggle in multiple ways, writing,
“Our most expensive monthly plan was US$300.
Customers who churned never complained about the
price. We just didn’t deliver up to their expectation. We
originally priced by the number of recording credits.
Since our customers had no control on the length of
the recordings, most of them were very cautious on
using up the credits. Plans based on the accumulated
duration of recordings make much more sense for us
and the number of subscription showed.”
#5: Pricing / cost issues
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The Top 20 Reasons Startups Fail
The 2019 shutdown of genetic testing and scientific wellness
startup Arivale came as a surprise to many partners and
customers, but the reason behind the company’s failure was as
simple: the price of running the company was too high compared
to the revenues it brought in:
“Our decision to terminate the program today comes
despite the fact that customer engagement and
satisfaction with the program is high and the clinical
health markers of many customers have improved
significantly. Our decision to cease operations is
attributable to the simple fact that the cost of providing
the program exceeds what our customers can pay for
it. We believe the costs of collecting the genetic, blood
and microbiome assays that form the foundation of the
program will eventually decline to a point where the
program can be delivered to consumers cost-effectively.
Regrettably, we are unable to continue to operate at a
loss until that time arrives…”
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The Top 20 Reasons Startups Fail
Despite the platitudes that startups shouldn’t pay attention to the
competition, the reality is that once an idea gets hot or gets market
validation, there may be many entrants in a space. And while
obsessing over the competition is not healthy, ignoring them was
also a recipe for failure in 19% of the startup failures.
Mark Hedland of Wesabe talked about this in his post-mortem stating:
“Between the worse data aggregation method and the
much higher amount of work Wesabe made you do, it
was far easier to have a good experience on Mint, and
that good experience came far more quickly.
#4: Get outcompeted
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The Top 20 Reasons Startups Fail
Everything I’ve mentioned — not being dependent on
a single source provider, preserving users’ privacy,
helping users actually make positive change in their
financial lives — all of those things are great, rational
reasons to pursue what we pursued. But none of them
matter if the product is harder to use.”
Children’s apparel delivery service Mac & Mia found itself in a
tough spot competing with highly successful companies like Stitch
Fix and shut down only a year after its 2018 launch:
“Mac & Mia faced a host of competitors in the children’s
delivery box space, including the aforementioned
Stitch Fix, which launched its kids clothing service in
2018. Stitch Fix went public in 2017 and has a market
cap around $2.7 billion. At least 20 other upstarts
have launched similar delivery services for children’s
clothes.”
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The Top 20 Reasons Startups Fail
A diverse team with different skill sets was often cited as being
critical to the success of a company. Failure post-mortems often
lamented that “I wish we had a CTO from the start,” or wished that
the startup had “a founder that loved the business aspect
of things.”
The Standout Jobs team wrote in the company’s post-mortem,
“…The founding team couldn’t build an MVP on its own.
That was a mistake. If the founding team can’t put out
product on its own (or with a small amount of external
help from freelancers) they shouldn’t be founding
a startup. We could have brought on additional co-
founders, who would have been compensated primarily
with equity versus cash, but we didn’t.”
#3: Not the right team
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The Top 20 Reasons Startups Fail
In some cases, the founding team wished they had more checks and
balances. As Nouncer’s founder wrote, “This brings me back to the
underlying problem I didn’t have a partner to balance me out and
provide sanity checks for business and technology decisions made.”
At Zirtual, which was forced to lay off 400 employees overnight
after a series of financial mistakes and miscalculations, co-
founder and CEO Maren Kate Donovan later admitted that one key
mistake was not bringing a CFO onto the board:
“If [a board] had actually been in tune, this would have
been caught like six months ago… I blame myself on
a lot of this, in not hiring more experienced people,
but it wasn’t any maliciousness beyond just naivete…
In retrospect if we had a senior finance person and
a senior ops person it would have been a completely
different story.”
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The Top 20 Reasons Startups Fail
Money and time are finite and need to be allocated judiciously.
The question of how should you spend your money was a frequent
conundrum and reason for failure cited by startups (29%).
As the team at Flud exemplified, running out of cash was often
tied to other reasons for startup failure including failure to find
product-market fit and failed pivots,
“In fact what eventually killed Flud was that the
company wasn’t able to raise this additional funding.
Despite multiple approaches and incarnations in
pursuit of the ever elusive productmarket fit (and
monetization), Flud eventually ran out of money —
and a runway.”
#2: Ran out of cash
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The Top 20 Reasons Startups Fail
In September 2019, augmented reality startup Daqri shut down after
burning through more than $250M in funding and failing to raise a
new round from investors:
“Daqri faced substantial challenges from competing
headset makers, including Magic Leap and Microsoft,
which were backed by more expansive war chests and
institutional partnerships. While the headset company
struggled to compete for enterprise customers, Daqri
benefited from investor excitement surrounding the
broader space. That is, until the investment climate for
AR startups cooled.”
European budget airline Wow Air met a similar fate; Chairman Skuli
Mogensen wrote to employees:
“We have run out of time and have unfortunately
not been able to secure funding for the company…
I will never be able to forgive myself for not taking
action sooner.”
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The Top 20 Reasons Startups Fail
Tackling problems that are interesting to solve rather than those
that serve a market need was cited as the No. 1 reason for failure,
noted in 42% of cases.
As Patient Communicator wrote,
“I realized, essentially, that we had no customers
because no one was really interested in the model
we were pitching. Doctors want more patients, not an
efficient office.”
Treehouse Logic applied the concept more broadly in their post-
mortem, writing,
“Startups fail when they are not solving a market
problem. We were not solving a large enough problem
that we could universally serve with a scalable solution.
#1: No market need
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The Top 20 Reasons Startups Fail
We had great technology, great data on shopping
behavior, great reputation as a though leader, great
expertise, great advisors, etc, but what we didn’t have
was technology or business model that solved a pain
point in a scalable way.”
Kolos was direct about its biggest mistake:
“With Kolos, we did a lot of things right, but it was
useless because we ignored the single most important
aspect every startup should focus on first: the right
product.”
A month after Paul Graham, Jessica Livingston, Trevor Blackwell,
and Robert Morris started the Y Combinator seed accelerator in
2005, they picked “make something people want” as their motto.
Our study shows that failing to do this is one of the easiest ways
to guarantee startup failure.
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included in this report
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