90% Failure Rate? Says Who?
This is a guest post by StartFast Entrepreneur in Residence Kyle Blumin. Follow Kyle on Twitter (@kyleblumin)
It is really hard to succeed in the start-up world. 90% of new products fail (The Start-Up Owners Manual: Steve Blank, Bob Dorf). So what is it about entrepreneurs that allow us to understand this and still move forward into the land of the unknown? Stupidity…balls…greed…blind faith? Maybe or maybe not. The reality is that many entrepreneurs want to solve for a problem they see that impacts them. And so it begins… They spend tremendous effort talking about it, building the prototype, iterating, scraping together money to fund it, going into debt for it, believing in their soul that this is the next great whizbanger – and 90% of them end up in a smoldering wrecked heap on the side of the road. How could this have happened? They knew the world was ready for their beautiful and precious whizbanger. They were so sure of it they mortgaged their house, leveraged life-long friendships, borrowed from college funds, borrowed from family, borrowed from their own quality of life and burned countless hours in the whizbanger factory. Exhausting…
There are multiple reasons why start-ups fail. Founders are a poor fit, the idea was bad to begin with, markets shift, investors bail, and so on and so on. I’m a big believer that a substantial amount of failed start-ups would never have started to begin with if they had just asked themselves the very fundamentally simple question, “how in the hell am I going to make money with this venture?” Or better yet, “how can I make a lot of money with this?” Keep in mind that 90% of start-ups fail. If you are going to invest your entire being into this venture and ask others to do the same and invest along with that effort, you had better be able to have a realistic potential to make it all worth it and then some. In other words, build a real business.
I’ve had three successful exits. I am grateful for that. However, I would attribute that success to a few things. The first is luck. Don’t ever let anyone tell you that luck didn’t play into their success in some way. I’m not talking about lottery-winning luck – I mean the power of convergence. I believe you can make your own luck if you work hard enough and try to think a few steps ahead of where you’re going. The second is being truthful with yourself. Put yourself in the shoes of your potential customers and investors. Would you write a check to yourself as an investor or customer for what it is your venture offers? If there is any doubt, you probably have some soul searching to do to figure out what holes there are in the story you are telling yourself. The last thing I would attribute my success to is being able to check my ego at the door. I often share with people that ego can cost you a fortune. Starting a company is not for those with thin skin. If you can’t look at failing and being able to pivot on an idea as succeeding, this game probably isn’t for you. However, if you are receptive to help from others, mentoring and constructive criticism, chances are you’re one step closer to success.
Are you working on the next great whizbanger? Man, I hope not…
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