If you want a startup to succeed, you need to understand why startups fail. We often hear about all the unicorns and great successes in the startup world whether that is on the news, social magazines, or amongst our peers. More notably is most startups fail and there are many lessons to learn from them to give your startup the best chance of success. Join us and learn how.
As a Harvard Business School professor for the past 24 years, Tom Eisenmann has guided over 1,000 Harvard Business students and alumni as they launched new ventures—many, to massive success, including Stitch Fix, Cloudflare, and Oscar Health. Around 2013, though, a few former students launched startups that, despite Eisenmann’s coaching, encouragement, and in one case, even his investment, failed. To his frustration, as a leading expert on entrepreneurship, he couldn’t explain why these startups failed after diligently following the HBS playbook for startup success.
And so, Eisenmann set out to research startup failure in order to better understand startup success. He read what little had been written on the topic, spoke to scores of failed entrepreneurs and investors who backed them, wrote two dozen case studies of failed ventures, and fielded an original survey of 470 founders that yielded some eye-opening results. In WHY STARTUPS FAIL: A New Roadmap for Entrepreneurial Success
Eisenmann reveals his surprising findings: six distinct patterns that account for the vast majority of startup failures:
1. Bad Bedfellows. Startup success is thought to rest largely on the founder’s talents and instincts. But the wrong team, investors, or partners can sink a venture just as quickly.
2. False Starts. In following the oft-cited advice to “fail fast” and to “launch before you’re ready,” founders risk wasting time and capital on the wrong solutions.
3. False Promises. Success with early adopters can be misleading and give founders unwarranted confidence to expand.
4. Speed Traps. Despite the pressure to “get big fast,” hypergrowth can spell disaster for even the most promising ventures.
5. Help Wanted. Rapidly scaling startups need lots of capital and talent, but they can make mistakes that leave them suddenly in a short supply of both.
6. Cascading Miracles. Silicon Valley exhorts entrepreneurs to dream big. But the bigger the vision, the more things that can go wrong.