4 Ways Startups Fail

blog.eladgil.com

22 points·eladgil··6 comments

All 4 points can be reduced to one: lack of a sufficient market to support the startup.

Notice that even crappy startups having all of those problems will do fine if they are in a hot market.

1. Running out of money may be the technical reason why a startup dies, but in reality it is a symptom that they either weren't selling or couldn't convince anybody to invest -- both bad signs.

2. Team implosion does not happen when times are good. Even if it does, the momentum of a good market will mean that the startup can survive because there will readily be people to take their place.

3. Lifestyle businesses either come from huge but highly fragmented markets or small markets. Either way, not good if you had higher ambitions. Being able to recognize where your idea falls is an important skill.

4. If your startup has a lot of potential or is making a lot of gains, there is no reason you should have bad investors. Bad investors pray on companies with little to no leverage.

I think location may also contribute to a startups failure.

In what ways? It would be great to hear more...

Well in certain places everything is a stone throw away (VCs, angels, lawyers, mentors, labor, etc.)

I think the beauty of Internet startups is that, since the Internet is (essentially) global, one doesn't need to put so much weight on where their business is physically located.

There is some credence to the idea that startups in NY or SF will do better because there is a certain type of culture around there. However, I don't believe a startup will live or die depending on where their mail is delivered.

That shouldn't be why they fail, but why they were not successful earlier.

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