Why do most startups fail in 2019?
Why do most startups fail in 2019?
The entrepreneur is constantly looking to improve and grow. When you are employed by a company, you are either dreaming of how to move up the hierarchy and take on more responsibility, or you are racking your brains to create an innovative product. When a good idea comes up, there is no one to hold it, it automatically becomes a dream that you grab with nails and teeth to turn into reality.
In the world of technology, creating a company seems relatively easy, especially for those who are programmers and spend the whole day producing codes, which in the end are micro-products and sometimes even complete products. In the view of many programmers, to create a company just have a good product, and for this product to be born, you don't need a lot of money, just sit on the chair and program.
In practice, things are not that simple. In the world cradle of startups, Silicon Valley, thousands of startups are born every year, but a good part of them do not complete the first one year of life.
Most of these failed startups use the Product Development Model for the development of their startup, to summarize in two steps, it would be the Following:
- Create the product
- Go to the market to sell
Step one - Create the product: Usually the product is developed in a totally isolated way, without any contact with the possible customer. You invest time and money without being sure that someone is interested in using this product, paying for the product and whether this sales process can be repeatable and scalable.
Step two - Go to the market to sell: At this stage you have a ready-made product and often it is excellent. It turns out that when it comes to selling, the results are often quite different than expected. Few people or anyone wants to use the product, price too high or too low and quantity sales well below expectations. As a lot of money has already been invested, they try to remedy and make changes to have the expected results, in the end, almost always the result is the same, the company dies.
The biggest problem for startups is always their foundation, which is exactly this model, which is not good and gives many margins for failure. The good news is that we currently have important resources available, which help entrepreneurs to significantly increase the chances of their startup working.
Steve Blank then started a process of in-depth research and studies, to try to understand if there was a pattern between startups that were successful and startups that failed. The result of all this was documented in his famous book The Four Steps to the Epiphany, where he takes a step-by-step guide for any entrepreneur who wants to start a startup.
I do not want to be unfair in saying wrongly, where and by whom this movement started, but the fact is, Geoffrey Moore strongly influenced Steve Blank to produce his masterpiece, although very important people came, the main one I would say is Eric Ries , creator of Lean Startup movement.
This movement ended up taking on gigantic proportions, with practically unanimous support from entrepreneurs and investors. On the other hand, there are several other people who have contributed
much with knowledge and lessons learned, which you should know and follow, as they directly complement the above authors.
An Incomplete list of authors and people who have contributed significantly are:
Alex Osterwalder, Yves Pigneur, Marc Andreessen, Hiten Shah, David Heinemeier Hansson, Jason
Fried, Sean Ellis, Dave McClure, Nivi, Naval, Mark Suster, Jason Calacanis, Paul Graham, Fred Wilson, Dharmesh Shah, Ash Maurya and many others. The ones I forgot, please put in
This movement and all these people, are changing the way we create and develop companies. They are techniques that are suitable for any area, they can and should be used by any entrepreneur who is thinking about opening a startup or creating a new product. By applying the recipes correctly, you are automatically increasing your chances of success.