
Why Startups Fail - epi0Bauqu
http://www.vcdave.com/2008/05/22/why-startups-fail/
======
Tamerlin
I've worked for three well-funded startups that failed for another reason,
though all of them ended up making the same mistake: they couldn't develop
software.

All three made some of the most common mistakes in software development, and
tried to hide those mistakes behind a sweatshop.

1) Hire lots of people. Silly... hiring people doesn't get work done if you
can't actually tell those people what you want their product to do.

2) Assume that hours = productivity. In every case, the competent folks among
us spent a lot of time cleaning up problems caused by the folks working the
extremely long hours. That contributed to my departure in every case... I hate
cleaning up other people's messes, as it prevents me from doing worthwhile
work. Firing those folks would have gotten us to market MORE quickly rather
than less.

3) Deadlines set in stone... that just doesn't work. If you can't adjust your
scope, you'll never actually hit the deadline.

4) Marketing based on the deadline... duh.

5) Perpetual crisis mode... when the requirements are poorly defined (if
they're defined at all) as well as late, you have to be willing to delay
launch or trim scope, or both. If instead you go into crisis mode and assume
that your sweatshop will churn out a working product, you've already failed,
and most of your best people will start jumping ship, leaving you with your
burnouts who's primary contribution ends up being technical debt rather than
working products.

I could go on, of course; I'm sure most people here have had similar
experiences. So far, what I've seen of startups that made it big, they
succeeded because they were either smart and did things well (e.g. 37signals),
or because their software wasn't what they made their money on. Where I work
now, we have hundreds of developers whose job is to pay the technical debt of
the sweatshop, and one side effect of this is high turnover and low tribal
knowledge. Most of our systems are in perpetual triage, and it's pretty
obvious that if they were the source of our revenue, we'd be history.
Fortunately, they only support the core business, so we're still around and
profitable... but very inefficient.

Several government contractors I've worked for clearly survive based on the
contacts within the government, because their software in many cases doesn't
even meet the requirements it was developed for.

That's quite a bit more than I'd intended :)

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dhimes
We get a lot of good advice from VCs across this site; I'd like to give some
back: Talk to the "staff." You will never hear about many of the problems
illustrated by Tamerlin, for instance, or even the lowdown on edw519's "is the
product any good?" from the CEO if the startup is in the early, rapidly
evolving phase (where the product is still fluid and trying to fit the
market).

The CEO will give the reports filtered through management, and a major
underlying reason why startups fail is that they fail to see what (or who) is
important.

Take the technical folks to lunch. If outside consultants are involved in,
say, non-technical aspects (content development, design, etc.), take them
also, but separately. Don't bring management. Let them talk freely and you'll
get a much clearer picture of what and who is important to the company's
success than you will if you only look through the CEO's eyes.

~~~
anamax
Any employee/consultant who takes that lunch should be willing to have it be
the "goodbye lunch".

~~~
dhimes
If the employee/consultant is the star and the company/investor can't see it,
he or she is better off elsewhere.

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edw519
This article may apply to those who are building the next "killer app", but
for the other 99% of us, it never mentions the two most important questions:

\- Is the product any good?

\- Does anyone want it?

If you can't answer "yes" to both of these, all the money in the world
probably won't help you.

~~~
michael_dorfman
Amen, brother. You took the words right out of my mouth. Many, many startups
fail for precisely this reason: they don't have a product people want.

~~~
nickb
Corollary: Make a product people want AND are willing to pay for it.

That last part is incredibly important.

~~~
andyangelos
Amazing thought! Having a business model outside of "exit" is really important
but does not receive enough emphasis.

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dennykmiu
Interesting article. My own experience is that over reliance on money and over
reliance on technology can also lead to failure. Having been an entrepreneur
for the past fifteen years, I believe this is the best time for startups since
we now have the luxury to bootstrap (until there is a workable business model)
and also the ability to build business around off-the-shelf technology.
Startup failure is sort of an old topic on this forum but my humble opinion is
that there is never too much information.

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andyangelos
The emphasis on speed could also be detrimental to startups not building the
next "killer app." Growing too fast too soon can result in some debilitating
growing pains.

~~~
dangoldin
I can't help but blurt it out with the current blog coverage, but Twitter
comes to mind as an example of this.

