A loud whisper of startup failure
The old marketing maxim — that bad experiences get shared with many people but good experiences only with a select few — is turned on its head with startups. The success stories are spread widely, generate considerable media, and have a halo effect: almost everyone “knows someone” whose startup made it. Big. But failures are often whispers, tightly held and shared with one’s closest friends, and often only when dark.
But startup failures, of course, vastly outnumber successes. As we’ve written before, failure’s lessons are instructive. Recently, more and more entrepreneurs are trying to take positives from failure by sharing their experiences, and added to this growing list comes Y Combinator’s Jessica Livingston with a long and helpful essay on what most often goes wrong at startups.
Livingston, one of YC’s founders, has seen many companies right at their earliest formation, so it’s a particularly instructive view. Many of these companies were founded, hit an important initial benchmark (YC acceptance) and then faded into mist without registering much impact outside a few people. The lessons here are less about product developments and competitive dynamics, than about people.
The second most common reason startups fail, Livingston says, is founder disputes (the biggest is not making something people want, but that seems a little self-evident — name the successful companies selling things people did not want?) And most of the causes of failure have their origins not with products, but with people: distractions, managing investors, resolving disputes, and on. It’s a helpful list – more so if you can use it to see what is in front of you, and not in the rearview mirror.