10 ways to accelerate failure in a startup

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25

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75

100

1 2 3 4 5 6 7 8 9 10 11 12 13 1415 16 17

Years in Business

% S

till i

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Source: U.S. Bureau of Labor Statistics – http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm

SIMPLE FACT: MANY BUSINESSES FAIL

1As an entrepreneur, you’re probably a “glass half full” kind of person. You look at a chart like this and see all the businesses that survived.

I look at it another way...

http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm


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Years in Business

% D

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50% Dead Before Year 6

Source: U.S. Bureau of Labor Statistics – http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm

A.K.A. DEATH IS EVERYWHERE

2DEATH IS EVERYWHERE.

50% of new companies will be dead within 5 years. That means that half of you that think you will be successful are dead wrong.

And that brings me to today’s topic.



Chief Failure OfficerTheFailurist.com

ACCELERATING FAILURE

IN A STARTUPThe Top 10 Steps to a Successful Failure

(and how to avoid them)

3I’m a serial entrepreneur, and that means I’m also a serial failurist.

During the past two decades, I’ve interacted with hundreds of technology startups. The ones that fail often fail for the same reason. Here are the top 10 ways you can accelerate failure in a startup.


10NOT SHARING YOUR STORYSecrets are overrated. If it’s easy to steal, you don’t have a business.

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4Be prepared to share. Do not keep your idea a secret. Secrets are overrated. This doesn’t mean that you share everything, but not sharing anything is just foolish. By not sharing, you are assuming that you have all the answers on day one... and that NEVER happens.

Secrets are overrated. If your idea is that easy to steal, you probably don’t have a sustainable business.


9NOT UNDERSTANDING FUNDINGIf you need $$, you need $$. Understand that investors weigh return and risk.

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5Funding is simple: if you need outside money, you need outside money. But you must understand that investors weigh potential return AND risk. No matter how good the opportunity, an investor will pass if the risk appears to high.

They are in a risky business. They stay in business by managing risk.

Understand that investors weigh return and risk when they evaluate an investment.


8NOT UNDERSTANDING COMPETITIONCompetition comes from behaviors, not just products. Changing behavior is hard.

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6Startups either obsess about the competition, or pretend they have none. Neither is good.

Obsessing leads you into blind alleys. Follow the customer, not your competition.

You always have competition. If there’s not a product you compete with directly, you are probably competing with an existing pattern of behavior. Changing human behavior is hard, often harder than competing with a feature set.

And don’t forget that competition also happens away from your product, in every area of your business: key hires, funding, resources...


7NOT HAVING A REAL CUSTOMERWho are they? What they will spend? How do you get their commitment?

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7A real customer is someone who will commit to spending either time or money on your product. Who are they? What do they look like? What is their profile? Not just fluffy labels, actual hard facts. And how will you reach them and get them to commit?


6NOT HAVING A REAL PRODUCTNo product, no business. Get to a product quickly.

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8An idea is not a product. Code that does nothing is not a product. Until you have a product, you have no idea if you can get and keep a customer. Without a customer, you have no business.

Get to a product quickly.


5NOT HAVING A REAL COMPANYAn idea is a stationary thing. A company is an idea in motion.

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9Everyone loves ideas. But ideas are like marshmallows. They taste great, but they’re not much use by themselves. Ideas need to be put in motion, executed on and made real. That’s what a company is for.

If an idea is a marshmallow, a company is a S’mores party. The marshmallow is a key player, but there are a lot of other ingredients, people and planning that make the party.

An idea is a stationary thing. A company is an idea in motion.


4NOT USING TIME WISELYMost of what you are doing has been done before. Don’t re-invent the wheel.

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10Startups love to invent new things. The trouble is they do that when they don’t need to. When presented with a task list, your first job should ALWAYS be to google the task and see what other people have done. Almost everything you do has been done before. From tools to code to best practices, it’s all out there to be repurposed for your needs.

Do not re-invent the wheel.


3NOT SETTING CLEAR GOALS No goals, no destination. Set goals. Execute. Repeat.

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11Goals are a short term destination. When you string a bunch of destinations together, you get a journey. For a journey to go somewhere, you need to complete every goal on the way, and have goals that make sense. Without goals, you are going nowhere.

Set goals, execute them. Repeat.


2NOT SHARING THE PIEThe business depends on skills you don’t have. Share equity accordingly.

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12Your company will always need skills you either don’t have or aren’t proficient at. ALWAYS.

Your success depends on others. The rewards should be shared too. Share equity accordingly.


1NOT HAVING THE RIGHT PEOPLEIn or out. No middle ground. Everyone must contribute.

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13You need to be surrounded by the right people. They must be mentally and emotionally committed and contributing to moving the company forward. Part time is fine, provided they are delivering what is expected. Warning signs include: slow responses to email/text/calls, being reactive, not proactive and providing excuses first.

Every other sin in this list you can survive. This is the exception. Half-ass commitment makes for a half-ass team, and that will kill you, every single time.

THE END

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10 ways to accelerate failure in a startup

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