What are the reasons startups fail?

Since 2010 when we got into the mobile app development business, we’ve found ourselves in a uniquely privileged position. As a development service provider, we’ve built hundreds of projects of different size, length and complexity. We’ve worked with world-renowned brands and companies as well as a large number of early stage startups. These different experiences gave us the opportunity to absorb knowledge and learn from the mistakes of others on how to build and how not to build your product, brand, team, audience, etc.

Most startups fail

It’s interesting (and sad) to note that most of the startups we’ve worked on over the years don’t exist anymore. This fits in with what we read about broader trends of startup success rates (60 to 90% fail depending on who you ask). A natural tendency then is to ask “Why did they fail? What happened? What went wrong?”

As you might expect, each story is unique and each startup has their own flaws, problems, strengths and weaknesses. Perhaps they lacked funding, perhaps their initial concept was too weak and lacked a market, perhaps they got lots of things right but messed up in a big way in some key area (pricing, customer support, etc.), perhaps they got outmanoeuvred by a competitor or lacked focused attention on improving the app after the initial launch. There are lots of areas that can potentially go wrong.

Problems faced by successful startups

In fact, this whole swathe of problems are common to the experience of most startups. Which is why I find it even more interesting to observe the fact that those startups we’ve been involved in which have gone on to be a success and are still doing business, faced them all too.

Investment or lack thereof doesn’t have to shape a startup’s success. There are numerous stories of businesses bootstrapping their way to success, often going many years without accepting any outside money. Even a bad idea without a market can potentially be pivoted into something more desirable or user tested, adjusted and streamlined until it makes market sense.

While these issues can be major problems and one of them may ultimately be the storm that sinks a startup. There has to be something else, something even deeper which determines which startups go down and which come out the other side growing and succeeding.

The secret of success

My take is that the biggest reason most projects take off is the same one most companies flourish. It’s about not giving up.

I know this goes against much of the accepted view. “Fail fast” has become a mantra of the startup scene. I understand the appeal of pushing hard, failing fast, taking away some key lessons and trying again, but I can’t escape the understanding that a fail is a fail, fast or otherwise. Persistence will likely be painful, yes. Its necessity inherently presupposes that times will be hard before they turn good. But it’s very hard to find an example of success that wasn’t achieved without overcoming some serious initial difficulties.

Time and again I see that the success stories aren’t reliant on technical brilliance, beautiful design, or the raising of investment. They’re not necessarily the ones with the best team, the smartest founder or the most disruptive concept. Instead, it’s the teams that encounter some or all of the problems described above and push through them. The will and commitment to keep on going even when it’s hard is what makes the success stories.

The key to perseverance

Of course perseverance can be seen as an element of character, a trait that can be built up, perhaps by persevering against smaller challenges first, perhaps by making stands for the things we want or believe in. But I think there’s more to it than that. If perseverance is all about guts and stubborn persistence, what happens when you face a new problem?

I think that perseverance is also fundamentally connected to creativity. One of my favourite authors John C. Maxwell says that “Creative people believe there is always an answer”. This then is the key to persevering through problems: refuse to give up And be creative in coming up with and testing innovative resolutions.

My wish then, for any startup, is both a creative approach to problem solving and the will and persistence to fight through the challenging process of getting a startup off the ground. Between these two, closely related factors, you’ll be able to solve each and every obstacle on your path to success.