Why do startups fail?
We were asked by Techworld the reasons we think startups fail. From talent to product-market fit, our operations team provide their views:
Paul Egan, CTO:
“Wasting time building the wrong product or, put another way, perfecting a solution before you’ve confirmed it’s what people want.”
Farah Kanji, Talent:
“Dead Wood. Firing is just as important as hiring great people. As soon as you realise you’ve hired the wrong person, let them go. No matter how hard it is to find their replacement. Period. No excuses. No one said running a business was going to be easy. Opt for the harder route because you know deep down inside that it’s the right thing to do. People will respect you and your decisions if you are honest and clearly explain your reasoning. Act with a sense of urgency, always. And maintain a strong level of integrity.”
Darius Meadon, Brand:
- A brand positioning that is vanilla — stand up, stand out and stand for something!
- Poor user experiences.
- Lack of building an active and vocal community of advocates during the early stages.
- Not understanding how, when and where to start relationships with customers.
George Northcott, Co-Founder and Business Development:
“Lots of startups we see find themselves building products that no one wants or there was no market need for. Make sure your company solves a problem and that that problem is big enough to be worth paying for it to be solved.”
Tomáš Ruta, Growth
“Startups fail either because they don’t manage to find — or maintain — product/market fit, or because they fail to scale their user growth (after they already found product/market fit).
“The pre-product/market fit startups should optimize for achieving high retention rate among users who get a lot of value out of the product. It’s important that startups don’t rely on “vanity”, one-size-fits-all metrics such as Monthly Active Users (MAUs) to measure retention. High retention should correspond with an increase in growth rate — it will become easier to get new users once you’ve figured out who loves your product.
“Many startups make a colossal mistake of scaling their user acquisition and operations before they reach product/market fit, usually because they optimize for manufacturing signals of future promise to investors. In the long term, these startups fail to retain their users and die — unless they fight sunk cost bias and pivot.
“If a startup reaches product/market fit, it’s still not “safe” until it manages to find a scaleable user acquisition channel. A collection of scrappy tactics that a startup might have used to reach its first users might no longer work once a startup needs to start growing exponentially. This is the time to hire a Head of Growth and start adhering to a rigorous growth process.”
You can read the original Techworld article here: here