Looking at over 5000 startups over the last ten plus years, we have assembled the ten most noticeable “Startup Killers” for a stage one startup. Each one of them can kill a startup in the first 1-2 years in the business. Most cases there are combinations of the multiple killers that end a company.
- Miss Market Fit – The fact that startup founders think that there is a need, does not mean that there is one. In today’s market, it is what the customers think that matters. Is there a real problem that needs solving or you are just creating one that does not need to exist.
- Under Capitalized – Grinding and boot scraping a business is admirable, yet when doing so a company will fail without sufficient capital. Founders have an obligation to make progress which requires capital – they cannot do that if running too lean. A startup is like a car. It needs fuel. No matter how beautiful the car is, without fuel it goes nowhere.
- Wrong people in the wrong seats – A big one. Most startups divide the roles and responsibilities between the founders and or the founding team regardless of background, competencies and expertise. It is a “Danger Zone” for investors. Decision making process in each operational area of a business is based on learned discipline that takes time to develop. Some skills and experience are necessary to have already and not learned on the job.
- Competition Ambivalence– At times, being in love with your own creations, creates a market allowance. When we hear founders say; “we are the only one” or “nobody does it like us” or “we did not find a real direct competitor”, most of the time it is a lie. Look harder you will find many more competitors behind you. The potential clients are solving the issue already, perhaps poorly and not the way you are but this is competition with their solution.
- Out Priced – At times we see startups that are pricing their product or service in an “off the cuff” kind of way. In today’s world customers determine your price, it is what they are willing to pay that counts. Companies that create pricing models based on trying to get the most price, will find themselves outpriced very quickly.
- User Unfriendly Product – Products in the digital world need to be as user friendly as possible. It is not necessary what is “Cool” or what you personally like, or what looks more creative. There is what works and what does not. Not always is there a need to reinvent the wheel. Stick to what is working and go from there.
- Tech – Business Misalignment – Tech founders tend to focus on perfecting the product and business founders tend to go after sales and revenue, startups need to have a critical balance and delicate structural tension between the two to be successful, otherwise they will find themself dead at the end.
- Poor Marketing & Branding – Relying on Social Media is not a marketing strategy. Establishing a branding foot print requires a deeper understanding in marketing, much more than being good on social media. Branding is more about creative discipline, marketing is about managing consistency.
- Misunderstand Customers – There is a difference between what you think your potential customers need and what they REALLY need. In my previous career we used to say “assumption is the source of all screw ups”. Do not assume, verify. We have seen so many startups that are doing a very poor job studying their target customers that are not based on facts and credible data. According to the marketing expert you need to remember the following number; 257, that is how many personal customer discoveries you need to do to consider it a market research.
- Wrong time in the wrong place – Launching the business requires a sufficient understanding of the geopolitical and economic condition at any given moment in time. Sometimes it is not about launching when you are ready, at times you need to wait for the right market conditions and be patient and hold off until such an opportunity presents itself. Launch too fast and you will be too early, launching too slow and you will be late. Find the balance.