Why Most Startups Fail

by Andrew Hyde, who is the founder of Inside Travel Guides. He planned Ignite Boulder and TEDxBoulder & started Startup Weekend.

Most startups fail. I’ve seen numbers as high as 98%. The number is so outlandishly high that the bright people founding startups ignore it as a mistake. It can’t be that 49 out of 50 companies fail.

The truth is, if you are “into startups” you are also really “into failure.” It is a reality of the industry and one to learn early on. It is shocking to look back on all the projects I have been involved in to try to figure out why they failed. What was it that took a project like Startup Weekend around the world to almost every corner, while other projects (whose names don’t matter because you’ve never heard of them) failed?

The beautiful mind of a founder will try to push through anything, even statistics like the failure rate of startups. To point out how absurd this is and empathize with the latest “Über for ______” app your friend just showed you, walk with me to get into the founder’s mindset.

“Hey, Founder, nice to meet you — and thanks for the pitch — but you have a 2% chance of succeeding.”

“2%? That’s awesome. I am so 2% material.”

“Actually, I just read the statistic again, and it’s .001%.”

“.001%? It almost seems obvious to me that I’m in that .001%.”

“Actually, I just read this again, and it says there is a .00000001% chance of success, and you will lose a hand or leg.”

“So, you’re telling me there’s a chance?”

When Jim Carrey says it in Dumb and Dumber, we all laugh. When your cofounder says it, you believe them. That is the problem with startups. That is the beauty.

Why do so many startups fail?

I’m sure someone out there has a data-driven answer to this question, and I think that’s awesome. But, like the overconfident founder, I will be happy to ignore it.

If I were a realist, I’d say most startups fail because they lack the money to move forward.

If I were an idealist, I’d say most startups fail because they didn’t find the right product-market fit.

If I were a trendster I’d say most startups fail because they didn’t try the newest technology and read the freshest blogs.

If I thought reading self help books mattered, I would say that those startups didn’t keep trying even after they failed.

If I were a fan of startups, I’d say to hell with everything. Pick an idea that you would be keen to be doing in ten years, listen to early customers, and form an amazing team.

If I were honest, I’d say most startups fail because the founders and teams don’t learn and pivot fast enough from what doesn’t work.

The biggest failure in startups isn’t that founders and employees aren’t adequately warned of their slim chances. It’s that they aren’t warned of the challenge of building something that lasts. That is something I’m still trying to learn.

Andrew Hyde planned Ignite Boulder and TEDxBoulder and started Startup Weekend. Keep up with his travels at http://andrewhy.de and follow him on Twitter @andrewhyde.

One response to “Why Most Startups Fail

  1. A small advice – “The best way to sell something: Don’t sell anything. Earn the awareness, respect and trust of those who might buy.” – Rand Fishkin

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