
Why Startups Die - pixelmonkey
http://www.pixelmonkey.org/2012/10/03/why-startups-die
======
gav
As much as people like to believe that working hard and not giving up will get
them through, there's other reasons:

\- The market wasn't there, the problem was too hard to solve, etc.

\- You simply weren't good enough to solve the problem. You didn't have the
right combination of skills, experience, or connections to make it happen.

These are more interesting to me as you can attempt to succeed where other
people have failed. I've always had an idea in the back of my mind about
getting a list of startups that failed before 2001, figuring out which had
good ideas, then retrying them again.

~~~
pud
> A list of startups that failed before 2001

Disclosure, I wrote this: <http://www.amazon.com/gp/aw/d/1416577939>

~~~
gav
I have had it on my shelf since 2002; the book and the site before that have
provided hours of amusement, thank you.

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bunderbunder
> When startups die, the official cause of death is always either running out
> of money or a critical founder bailing.

This sounds like a truism to me. Like "the brain stopped working", it's more a
definition of death than an explanation of what caused it.

> But I think the underlying cause is usually that they’ve become demoralized.

And this, I suspect, is confusing correlation for causation. The team getting
demoralized is a symptom of the company being in a poor, possibly life-
threatening, state of health. Like many symptoms of real disease (e.g.,
diarrhea) it's something that will worsen the situation and needs to be
treated. But it's not necessarily the underlying cause. If the real source of
illness is something that won't resolve on its own then focusing too much on
the symptoms is at best a form of palliative care. At worst, it exacerbates
the situation by lulling you into believing that you're addressing the problem
when you're actually allowing it to continue unchecked.

~~~
pixelmonkey
To be clear, both of the quotes you have there are pg's from "How Not to Die"
-- excerpted in the article but not quotes from the OP.

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orangethirty
Here is why mine have died:

Running out of funding. This is a tough one to deal with, because you think
you can make up funding with more work. My solution is to offer a very stage
product right from the start in order to get some cashflow going in. So far it
has worked.

Building something people don't want. I once spent two years developing an
idea to only realize people did not want to pay for it. Two years spend buying
equipment, developing marketing, etc. But I did not test the market. _I know._

Lack of sales skills. This one is really tough. As an introvert, is was really
hard getting how sales work. I read book after book trying to find the magic
formula. Turns out that sales skills are more about social skills than
anything. So my lack of sales skills were really a lack of social skills. One
good startup died due to that. But I did realize the problem, and have been
working on improving my sales/social skills. So far so good...

Wrong market. Spent five years trying to sell to a market that would not buy
from me. Why? A combination of lack of social skills and pricing kept me from
achieving any success.

Being the lone founder. My biggest successes have been when I've worked with
someone else. Having someone to split the workload makes a huge difference.

Buying too much inventory ahead of time/demand. I still have some left.

Not getting deals on writing. A good startup I was building died because I did
not get a deal in writing. I went and bought some inventory to satisfy the
deal, and then the buyer backed out.

I have many more... :)

~~~
flyinRyan
Well, I have to commend you on your entrepreneurial spirit to keep trying. If
you keep trying you're bound to hit it eventually (if you haven't already).

~~~
orangethirty
That is why I'm building nuuton. If I'm about to get lucky, then I better aim
high. Thanks for the nice words.

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forgot_password
I hadn't seen Chris Dixon's post on what startups need and don't need before.
I disagree with vacation policy being unnecessary for startups. I know some
startups don't have one and I feel like it's done to create friction whenever
employees want to take time off which feels a bit insidious. And it creates
the feeling that some folks are freeloading. I don't think it's overly
"corporate" to have a well-defined vacation policy

~~~
mratzloff
> I feel like it's done to create friction whenever employees want to take
> time off which feels a bit insidious. And it creates the feeling that some
> folks are freeloading.

It's exactly that. The idea that people are more productive if all they do is
work, for 50 hours a week or more, is such an insanely stupid notion. But I
hear it time and again from founders who expect employees with a 0.5% stake to
put in as much time as a founder who has a 30% stake.

Even founders should keep their work hours under control--they set the tone
for the company, and a workaholic tone isn't healthy. People just burn out,
they feel demoralized, and it creates conflict.

Working less also forces you to make hard decisions, to prioritize and focus.

Finally, founders should be HAPPY that employees take time off. It rejuvenates
them and makes them that much more excited to get back to work. And often when
they're not in the heads-down grind--when their mind is relaxed--they come up
with some very good ideas.

------
joshmlewis
I just recently got out of an accelerator and the biggest thing I saw in the
program was teams either able to execute or not able to execute. This makes a
world of difference.

Also, figuring out your priorities as far as design first, just get something
out there, etc. but whatever it is make sure everyone agrees on the time and
methodology, ie design first will take longer.

Another big one, and one I got screwed over on, was finish all the legal
paperwork in a program like this as early as possible. Make sure to sign your
employee agreement and pay/equity agreement if you're getting it. Do this
early on so everyone is on the same page and is clear about what's going on. I
was cofounding and just this last Sunday got terminated after spending the
last 4 months working on it. No cause or notice and almost without pay (still
working on this). Always fear the worst and never think it won't happen to
you.

~~~
j2bax
Wow, that sounds like a really bum deal. Thanks for sharing your experience.
Hopefully it will help others avoid the same fate. Keep your chin up and keep
pressing forward and you will come out on top in the end.

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derwiki
> Pre-Emptive Scaling

Man, this one a thousand times over. I shudder when I think of all the work
that could have been saved if these premature optimizations had never been
made (I wrote a blog post on 500m row tables in MySQL about this). A little
dose of YAGNI would go a long way to many startups. Also, re: Twitter and
Tumblr's scaling problems: they didn't fail because of sporadic downtime. They
fixed the actual problems/bottlenecks when they encountered them, and went on.

~~~
ftwinnovations
Agree 10,000x over your 1000x. On the occasions where rapid unexpected (and
awesome!) traffic or growth spikes happen you can almost always temporarily
patch the situation by scaling vertically (bigger/faster disk/CPU) or quick
and dirty horizontally (load balancing or replication) and then have some
breathing room to work out the real meaningful or cost effective scaling
solution.

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neigrando
Hi I´am from Brazil, and I think most of Startup Entrepreneurs are not
prepared for business, I know the practice and experience is great, but they
need some methodology, best practices, fundamentals of business, case samples
and advices also.

Books like “Business Model Generation”, by Alexander Osterwalder & Yves
Pigneur, “The Startup Owner´s Manual”, by Steve Blank and Bob Dorf could be
very useful.

Here in Brazil we have the recented lauched book in portuguese called
“Empreendedorismo Inovador – Como Criar Startups de Tecnologia no Brasil”, 25
authors, Editora Évora.

Att. @neigrando

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saddino
Every startup requires some level of the Jobsian RDF to exist around the
founders and extend to the core team. The problem is that, for most startups,
the RDF will be threatened by real-world events (nobody is
using/buying/investing-in your product) and once the RDF is gone, it's very
hard to keep going. That's when morale suffers. That's when founders leave.
Startups die the same way because the begin the same way (and rightfully so):
with a passion about an idea that doesn't necessarily conform to reality.

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DodgyEggplant
tl:dr : dont quit

~~~
bkanber
Not enough people take that message to heart. Quitting is the #1 mode of
failure not just in startups but in damn near everything.

~~~
bennesvig
The opposite is also true. Too often people don't quit when they should
because of sunk costs they've invested.

~~~
bkanber
Agreed. But I just call that "being too stubborn to learn from your
experiences"

~~~
andrewflnr
It's very difficult to tell the difference from the inside. Am I just bein
stubborn, or do I just need to hang on? It's essentially a matter of
predicting the future, and you don't have enough information.

~~~
fatbird
Having gone through this in the last six months, I found I had more than
enough information, and what was standing in my way of leaving was a somewhat
complicated mixture of emotions surrounding the act of leaving. Of course, a
clear headed look at the circumstances let me wipe all those emotions away,
and I left at the right time, and without regrets.

For devs, a great rule of thumb to keep in mind is simply this: When the
paychecks stop, so do you. The odds of any startup getting anywhere drop off a
cliff once the money runs out, and the founders are running around
desperately, talking about commitment and challenge and reward.

