What’s the biggest reason startups fail?

Bad idea? Poor vision? Lack of capital? Poor execution? Fight amongst the founders? Lack of product/market fit?

I’ve given this one a lot of thought having had more failures that successes in my life as a serial entrepreneur. And I’ve certainly seen startups fail for all of the above reasons and more.

And some successes baffle me totally. SnapChat? Who would want disappearing messages? Twitch? Why would anyone want to watch someone play video games? Yep,  I’m an out of touch old fogey.

But entrepreneur Bill Glass of IdeaLab fame has done more than give the question a lot of thought. He did an empirical study. Spoiler alert! The biggest reason startups fail is poor timing! Yep, if you are too soon with your big idea, like Webvan, trying to build a food delivery service before the advent of smartphones, or too late, when the market is crowded with clones of market leasers, it doesn’t matter. Either way you will fail.

Back in 2001 at SmartWorlds we developed a mobile app for online shopping, called iShop, six years before the iPhone was introduced. iShop was intriguing enough to get us an article in The Wall Street Journal, complete with an original hand drawn illustration. But we were years too early, so we failed.

Check out Bill’s Ted Talk.

Bill Gross has founded a lot of startups, and incubated many others — and he got curious about why some succeeded and others failed. So he gathered data from hundreds of companies, his own and other people’s, and ranked each company on five key factors. He found one factor that stands out from the others — and surprised even him.

 

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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