Failure post-mortem, which is an essay that is used to inform the rest of the business community by the founder whenever his or her startup company shuts down, is so common that it becomes a Silicon Valley cliché. Although some of these posts are honest and courageous, others seem to just point fingers or issue backward non-apologies.
The significantly increasing quantity of failure post-mortem has created a weird trend of failure, in which celebrating failure is a way to get out of bad behavior. Since starting a high-growing business is a roller coaster both exciting and terrifying, it’s often stressful for founders and CEOs to maintain their success on the stage, especially when there is a mess behind the scenes. The entrepreneurs just openly acknowledge this problematic story of “entrepreneur is a hero” recently only after the death of Ecomom’s CEO – Jody Sherman. Even though it seems like a lack of courage if we admit and consider the failure publicly, it also can be a case study for other entrepreneurs to learn.
Not long ago, CB Insights analyzed about 100 assignments by startup founders and CEOs to find out the real reasons that lead to their thought that the companies are failing. The collected data showed that 42% of respondents agree the main reason for failure is that their products did not satisfy the target market and customers’ demand.
Obviously, your company will be going to fail if no one wants your products. Meet Hank, an online shop, is one of the outstanding examples. Established in 2014 with the name Hank The Square LLC by Louis Aronne and his partner, James Baker, Meet Hank started as a tote bag business. After a long time that doesn’t get revenue from simply designed tote bags, they decided to expand the category with various kinds of fashion and accessories, such as print sweatshirts, print T-Shirts, yoga mats, and cushions,… which brings a wide range of choices to potential customers. This timely decision has saved the business from the risk of bankruptcy within 1 year and steadily develops till now.
Meethank.com – Homepage
Anyway, many startups still irrationally believe that they’ll convince their target customers to buy things they don’t want. One of the most typical examples can be mentioned is the appearance of mobile phones. Although dismissed as a novelty in the early days, it’s obviously no longer something new nowadays. According to Steve Jobs – the late Apple co-founder said: “A lot of times, people don’t know what they want until you show it to them.” This statement has been taken to heart by many entrepreneurs. Anyway, for every $19 billion company, such as the private transportation service – Uber, all manner of frivolous products seem to never evolve past the phase.
They’re still more concerned about the reasons for failure. The top reasons can be shown as Lack of sufficient capital (29%), the assembly of the wrong team for the project (23%), and superior competition (19%)
In general, these reasons are in line with the statement from industry experts. For example, a partner at the startup accelerator Y Combinator, Paul Graham, mentioned in 2007 that two main reasons for the death of startups are running out of money and the leaving of founders.
Steve Hogan, who runs a startup called Tech-Rx, also said that firms founded by an individual were more likely to fail than that with a partner. The demand for products of its shortage was ranked the second reason. He explained that the role of a co-founder can help avoid diverse reasons for failure, which are cited at the bottom of the CB Insights chart, including discord, poor marketing, and the wrong team.
Also, Hogan believed that running out of cash is not the main reason that leads to the failure of a startup, since it’s just a symptom of another problem that may appear because a CEO had ignored all other signs. “Unfortunately, sometimes that’s the only ‘symptom’ that management notices,” he said.
