May 13, 2014

Epic Fails in the Startup World

The New Yorker magazine has a nifty little piece with the headline: Epic Fails in the Startup World, which completely fails to deliver on the promise of the headline.  It never names a single Epic Fail in the Startup World.  Instead it focuses on some drivers of the fact that startups fail at a huge margin over successes.

Over-confidence is a big reason for startup failure.  To my way of thinking, another way to phrase that is just plain old stupid. It's the kind of stupidity that is sometimes characterized by the guy who says: "Hold my beer and watch this!". The most epic fails that follow sometimes get publicized by earning a place in the Darwin Awards.

But I'll bet that the rate of failure of startups is vastly understated. I'll bet that the conventional estimates of 80% of startups fail is low, and that the number is much more likely at 95% or more. This is likely true because many/most startups never get reported as starting up. The question becomes: "When does a startup become a startup?" A lot like "When Does Life Begin?"

If a startup exists at conception of the idea, then probably 99% of startups fail. Most never get past the idea stage. You probably have a few of those yourself. I know I've gone through a few of those. But of course they were never reported to anyone keeping statistics on startup failures. And, by the way, who the heck is keeping track of these things anyway?

It's not just the failures that are worrisome, it's the walking dead. Those are the startups that just keep hanging in there, in that ugly space between the champagne and burnt toast. These are a testament to the motto: "You can't fail if you don't quit!" Someone should put them out of their misery, and let them go on to fail at something else, just for the variety of it all.

Speaking of going on to something else, one point that the New Yorker article debunks is the conventional wisdom that an entrepreneur who fails once has a better chance of success the second time around. Absolutely wrong. Stupid is stupid. Ain't no cure for stupid. Or, as Forest Gump says: "Stupid is as stupid does". Yet even with all his stupid, he went on to startup a successful shrimp fishing business. Of course, that was just in the movies, not real life.

Take heart, startup people, success is right around the corner!

Or is it?

Here's a startup that analyzes startup failures:  (check the videos)
The biggest analysis of startup success and failures is The Startup Genome: Compass

These resources are important because it's better to get smart from other people's stupid than from your own. People who learn from other people's experiences get smart fast. People who don't learn from other people's experiences will fail at a much greater rate. That's one of the best reasons for having a Board of Advisors.