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I've always wondered what the advice would look like if you compiled a list of what not to do from failed companies. TFA is a list of the successful ones who go
by noxToken 9y ago
I've always wondered what the advice would look like if you compiled a list of what not to do from failed companies. TFA is a list of the successful ones who got it right, so we know what they did to make it. Yet I'm sure many people follow this advice and still fail.
You can find wildly varying statistics, but somewhere between 50% and 90% of startups will fail within 2 years. What did those companies do (or failed to do) that made them close up shop?
- ihaveajob 9y agoVirtually all of them ran out of money because they didn't have enough customers to cover their expenses. It seems silly but if you put it in basic terms, this usually maps to something very concrete in your domain.
- collyw 9y agoI guess thats similar to saying all deaths occur by hypoxia. What caused that to happen it is usually the part we are interested in.
- rhizome 9y agoif you put it in basic terms, this usually maps to something very concrete in your domain. For those of us who didn't go to college, can you translate "maps to something very concrete in your domain" into concrete terms? It's pretty abstract.
- yathern 9y agoIt means that in the area in which a (failed) business tried to operate, the failure can be more specific than "couldn't cover expenses". For example, a shoe company that makes very cheap shoes. Costs 5 dollars to make, sells them for 10 dollars. They have basic operating expenses of 50 dollars a day. They need to sell 10 shoes a day to stay in business by the skin of their teeth. If they don't, they 'failed to attract enough customers to cover expenses'. But they could have a more specific view: 1) We didn't have any advertising since we were operating on a shoestring (hehe) budget - losing customers 2) Our low prices actually made us seem like a low quality entry in the market, and hurt our sales. 3) We could have invested more into our production line to reduce recurrent costs. Or any number of things. But it ultimately comes down to "we didn't have enough money"
- maxxxxx 9y agoAgreed. I know plenty of people including myself who tried to start something and didn't go anywhere despite putting in a lot of time and effort. It would be good to look at what the failed attempts did vs the ones that succeeded. Personally I think there is a lot of luck involved (right time, right place, meet the right people) but maybe with enough data one could find lessons for how to do better.
- andyjohnson0 9y ago> TFA is a list of the successful ones who got it right, so we know what they did to make it. Beware survivor bias. They may not have succeeded due to what they did (or say they did).
- noxToken 9y agoWhich is exactly why I posted this! We know what the survivors did. We get their interviews all of the time. Did the failures follow the same path and fail? Did they fail to follow some golden rule? How much of startup culture can be distilled down to follow some given advice versus some dumb luck?
- deleted 9y ago[deleted]
- collyw 9y agoMaybe they followed the advice given by those that did succeed. Would be interesting to see.
- taneq 9y agoKind of like that old story about the war planes needing armour in the places where returning planes hadn't been shot.
- owebmaster 9y agoThis is genius. Where does this old story come from? Never heard it. EDIT: thanks for the answers! This analogy is pretty good for simple cases (improvement on planes' armor). But if you optimize only this variable, your war plane will be heavier and you'll have a lot of other problems and fail, too.
- fhood 9y agoWorld War II I think? Found it, the guys name was Abraham Wald.
- noxToken 9y agoFourth paragraph in the entry about Wald[0]. 7th paragraph in the entry about Ops Research[1]. I'm sure that there are more in-depth stories about this on the web. [0]: https://en.wikipedia.org/wiki/Abraham_Wald#Life_and_career https://en.wikipedia.org/wiki/Abraham_Wald#Life_and_career [1]: https://en.wikipedia.org/wiki/Operations_research#Second_World_War https://en.wikipedia.org/wiki/Operations_research#Second_Wor...
- bluejekyll 9y agohttps://www.johndcook.com/blog/2008/01/21/selection-bias-and-bombers/ https://www.johndcook.com/blog/2008/01/21/selection-bias-and...
- chasely 9y agoYou've already received the right responses (Abraham Wald), but this is my favorite excerpt/article about it [1]. [1] https://medium.com/@penguinpress/an-excerpt-from-how-not-to-be-wrong-by-jordan-ellenberg-664e708cfc3d https://medium.com/@penguinpress/an-excerpt-from-how-not-to-...
- 9y ago
- owebmaster 9y agoThings you do to achieve success are limited, but to fail aren't.
- shubhamjain 9y agoStartup success is Anna Karenina Principle[1] flipped. I wrote about it some time back[2]. Every startup dies either because it failed to build something that people would want to pay for, or failed to create a profitable business around it (or, maybe the founders just got burned out). Successful businesses, on the other hand, find their own path to make it to the top. That doesn't mean you can't learn from articles and books, but it takes plenty of learnings and failures of your own to 'get' it. That's why it's important to keep shipping and trying. [1]: https://en.wikipedia.org/wiki/Anna_Karenina_principle https://en.wikipedia.org/wiki/Anna_Karenina_principle [2]: https://shubhamjain.co/2017/05/12/contradictory-startup-advice/ https://shubhamjain.co/2017/05/12/contradictory-startup-advi...
- danieltillett 9y agoWe are obviously thinking along the same lines :)
- shubhamjain 9y agoQuite a bit of coincidence. Unfortunately, our conclusions are poles apart.
- danieltillett 9y agoYes that is an interesting point. While on some level I agree with you (in the same way all people die from lack of oxygen to the brain stem), the path that failed startups take to get to the point of failure is very diverse. Every time I think I have seen every possible way for a startup to fail I am surprised with something new. If I was going to go with your thesis, the common thread of failure is to be found very early - people are working on startups that just will never be successful because the underlying idea is bad. It is really hard to come up with an idea that can allow the unavoidable mistakes to be made and still succeed.
- shubhamjain 9y agoMore than anything, it proves that you can use quotes and statistics in a manner to confirm your own biases. :) The decision tree has far too many branches to predict where the starting point will lead you but my point was, even when the recipe of successful startup (build something people want, talk to people, start small ... etc) sounds so obvious, the process of accomplishing it is anything but obvious.
- danieltillett 9y agoI can’t add anything concrete, but anecdotally the reasons I have personally seen are very diverse. To misquote Tolstoy all successful startups are all alike; every failed startup is a failure in its own way.
- sah2ed 9y agoPeter Thiel's version: "All happy companies are different, all unhappy companies are alike (in that they failed to escape "sameness" or competition).
- mi100hael 9y agoI think it would be less insightful than you think to hear from failed companies. I wouldn't be surprised if 50%-90% of startups begin life as side-projects and the founder(s) get lazy and decide to fold before even really attempting to get off the ground. Out of the remaining startups that either succeed or fail after substantial effort, I'd be most of the failures can be attributed to rather mundane, predictable circumstances (most of which are mentioned in TFA): - Building a product or features no one wants - Taking too long to ship and offering a discounted beta in the meantime - Wasting time & resources on non-revenue tasks because "business"