Some of the entries in the “Reason
for Failure” column are more predictable than others. The site isn’t searchable
– it’s just a basic spreadsheet, really – so I can’t give you an exact tally,
but the most common problem seems to be poor or insufficient capital at the
start of the project. It’s really difficult to estimate the costs or durations
of tasks you’ve never done before, and even if you are an experienced
entrepreneur there is still a very strong motivation not to borrow (or raise)
more money than you will be able to pay back, or allocating too much of your
product’s service life to the development phase. I would point out, however,
that leftover funds can be invested in any number of useful ways, including
paying down the company’s debts – and no one will mind if you launch early, but
going too long without generating revenue will kill any company…
Almost as common on the list
are variations on the theme of marketing failure. In some cases, it might be
because the product is too innovative and the founders underestimated the time
and effort needed to create a market for something that has never existed
before. In other cases, it might be because there were already too many
competitors in the market, or because the number of customers who could
possibly want/use the product was just more limited than the output of the
firms trying to provide the product. And there is a definite mixture of
products that no one could possibly want, products that could not be produced
at any price people would be willing to pay, and business models where the cost
of acquiring customers was higher than any realistic amount of sales that could
be made to those customers…
Product concept failure also
comes up a lot – some of the entries just say things like “product failure” or “complex
and buggy product,” while others lament “crappy business model,” “focused on
engineering first & customers second,” “too much time building it for
ourselves & not getting feedback,” and “lack of product-market fit, and
everything else in between.” And then there are the entries that don’t offer
details (you’d probably have to read the linked article about the project) but
which speak to the life of an entrepreneurial start-up, like “We were naive
idiots,” “people really didn’t really LIKE anything about our product,” and “technical
co-founder quit & pulled the code out from under me.” Some things really
are harder than they look, after all…
This isn’t the only place on line
that you can find such stories, of course. Just about all of the crowdfunding
sites have pages about projects that did not succeed in getting funded, and
stories about companies that did get funding but failed anyway. There are also
a huge range of business database services that can give you both the narrative
details and the financial information about some of these unfortunate stories,
if you’re willing to subscribe or if you can get access to a research library
that already does. I’m not suggesting that it would be possible to find
examples of any type of business venture you were considering launching and
review the ones that have already failed, or that doing so would automatically
enable you to avoid making the same mistakes. As a business instructor,
however, I can tell you that I could put together an entire class on
entrepreneurial business failures directly from the Autopsy website and the
hotlinks available there – and if they ever let me teach entrepreneurship I
might do just that. I’m also suggesting that if there are examples available of
companies that tried to do exactly what you are trying to do and failed, and
you don’t at least go and look for those examples, you won’t need to be mocked
by scruffy bloggers like me in order to feel like an idiot…
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