Why do startups fail? The most common reasons ⬇️
Ghost Kitty
42 replies
Why startups fail:
1. Founders and early employees' problems:
- Lack of experience. Business experience and niche expertise
- Network
- Lack of energy and stamina
- Bad first hires
2. Slow feedback loops
3. Selling vitamins vs pain killers
4. Bad positioning and no differentiation
5. Random acts of marketing
6. Treat it like a sprint, not a marathon
7. Fake product-market fit
Replies
Anton Gera@thisisanton
Spotely
"Selling vitamins vs pain killers" - I'd say this is one of the most important reasons for failure, especially for SaaS
Share
40% fails because they run out of funding 😅
The LinkedIn Inbound Playbook
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@olenabomko Lets check the data. I was a bit off actually. it was 29% Startup failure can stem from various factors, and while percentages can vary based on different studies and analyses, some common causes include:
Lack of Market Need: Around 42% of startups fail because there's no market need for their product or service. This means they haven't accurately assessed or addressed a real problem or demand in the market.
Running Out of Cash: Approximately 29% of startups fail due to running out of money. This could result from overspending, miscalculating costs, or failing to secure additional funding.
Not the Right Team: Roughly 23% of startups fail because they don't have the right team in place. A strong and complementary team is crucial for navigating challenges and driving growth.
Being Outcompeted: About 19% of startups fail because they face stiff competition and can't differentiate themselves effectively.
Poor Marketing: Close to 14% of startups fail due to ineffective marketing strategies or failing to reach their target audience.
Ignoring Customers: Around 14% of startups fail because they ignore feedback from customers or fail to pivot based on market response.
Product Mis-timed: Approximately 13% of startups fail because they've launched their product or service at the wrong time, either too early or too late for the market.
Pricing/Cost Issues: Roughly 18% of startups fail due to issues related to pricing or cost.
These percentages are based on research and data from various sources and may vary slightly depending on the study and the specific industry or market. It's also worth noting that many startups fail due to a combination of factors rather than a single cause.
@olenabomko Personally I think the most common reason for failure. Is The doom of complexity. Insufficient resources to deal with complexity. Especially post PMF. When you have customers. Things become extremely complex. So the sweet spot IMO. Is High utility, low complexity, delightful experience
The LinkedIn Inbound Playbook
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WorkHub
These are all reasons, but the major one is "developing a product in search of a demand, rather than addressing a specific consumer pain point."
Consumers need holes, not drills. To succeed in the market, a business should always address the consumer's pain points.
The LinkedIn Inbound Playbook
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The LinkedIn Inbound Playbook
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8. Conflicts among partners.
BeforeSunset AI
Most startups fail due to founders' lack of experience, poor hiring decisions, and slow feedback loops. Focusing on solving real customer pain points, having a differentiated positioning, and treating entrepreneurship as a marathon are key to success. 🚀
Haha LOVE that! Selling vitamins instead of pain killers!
@lisa_steingold1 Rookie question here! What exactly does this point mean? I'm being able to extrapolate the general idea around selling "bandaid solutions" instead of a product that really solves a problem for the user, but what's the true definition of this? Do you folks have any examples of what a vitamin vs. a pain killer looks like for certain customer segments?
Main one would be "founders choosing to close the company" everything else can be recovered, can pivot, can change almost anything if you don't choose to close the company!
ClothingAI
This list is definitely very accurate, I really like it!!
This is a great question ---- in our longitudinal research findings we specifically looked at correlations in attitude, motivations and cognitive bias with venture success and failure. We looked at two cohorts of founders, those who were in the starting up phase and those scaling. We also compared the entire group founders to corporate executive workforce.
We found a high focus on detail and structure correlated with early stage venture failure
we found high initiation (a proactive bias to take immediate action on ideas) and figure things out no the go is correlated with more rounds of venture capital and greater scale in revenue, number employees and size of exi
We found high bias for abstract big picture thinking is correlated with greater ambition (global markets vs local markets), more rounds of venture capital, larger exits, revenue and number of employees
This is naming just a few. You can check out more at getmarlee.com
The LinkedIn Inbound Playbook
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not aiming a real and big enough problem
YourGPT
Launching soon!
Great Points Olena,
and I really like this one Selling vitamins vs pain killer
Brokenatom
DAMN, on point.🤯
SOOO RELATABLE.
"Vapourware starter kit"
I have few more important things that tend to fail or break a startup.
Lack of Market Need
Poor Management Team
Product Issues (Key Component ~ Difference between Ideation and Visualization)
The LinkedIn Inbound Playbook
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A startup can fail for many reasons, such as how well it researched before building a product, the quality of the product, the UX and UI of the product, and how effectively it solves users' problems. There are many other factors as well. For instance, we are building a product for non-coders and non-programmers.
With the help of this product, they can build a website of any niche or a mobile app. Unlike Bubble.io they have prebuild templet within it but we do not have any. this tool will write fresh code line by line for your product.
CuratedLetters
Launching soon!
I would say lack of self belief comes into play too
App Finder
How do you know that?
App Finder
@olenabomko I see. It may not be so important in this case, but I'd always give a source or justification for all assertions, in this age of misinformation and fake news.
BTW, could you elaborate on Selling vitamins vs pain killers and give example?
The LinkedIn Inbound Playbook
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Launching soon!
Ah, startups and their rollercoaster ride to success! From lacking experience to mistaking sprint for a marathon, it's like they're dancing to the beat of entrepreneurship music, just with a few missteps here and there! How do you keep your startup tango on point in this fast-paced world of business?
BeforeSunset AI
Many startups fail due to founders' lack of experience, poor hiring decisions, and inability to pivot based on customer feedback. Successful startups solve real customer pain points, differentiate themselves, and treat entrepreneurship as a marathon requiring stamina and adaptability.