10 Reasons Why Startups Fail

9/10 startups fail. While that’s a pretty high rate of failure, why do so many startups fail?

Most founders never really understand why their startups fail. Some play the blame game, others blame the economy, and a very few others take the blame themselves.

Watching your new business fail is extremely sad. It’s even worst if you don’t really know why it failed.

Here are 10 reasons why most startups fail:

No demonstrated user need

For example, consider 3D movies and TV. If you ask people why they sometimes prefer stage to screen, nobody ever says, “Oh, movies are only 2D.” 3D tech has novelty valuebut even a little research would show its pushers that most people are perfectly happy to go back to 2D movies after experiencing 3D, and that many  actively avoid 3D. That wasn’t the case when sound or color or fancier special effects were added.

Fear of testing hypotheses

Most startups launch in a cloud of hype and bullshit. That hype is really useful: Startups are difficult and painful; you have to be really excited to do it. But the hype is also dangerous: It lets people assume they just can’t fail. If a startup team doesn’t seek contact with reality early and often, they will have a bunch of surprises in store. It hurts to find out your ideas are dumb, so you have to really want to know the truth more than you want to feel comfortable.

No love for the audience

If you are going to spent years studying and serving people, I think you have to love them. YouTube’s first designer, who happens to be an old friend, would grab a video camera, hop on his motorcycle, and go to users’ houses to see them in their natural element. He’s a natural democratizer of technology, and wants people to get really involved in what he’s making.

No love for the domain

Never work in a startup domain that you really don’t care for or not interested in.You need to love what you are going to spend all day thinking about.

No love for the team

Hostility between roles? Hostility between founders? Management that doesn’t really care for the employees? Employees that don’t care about one another? That company is probably doomed.

A desire for perfection

Perfection kills. The things that your early adopters care about? Those should be awesome. Everything else? Fuck it. A team that has a hard time being pragmatic will spend a lot of their time and money on shit that doesn’t matter. And that will keep them from getting the product out early enough to get useful feedback.

Not thinking about revenue

A lot of people want to make a product, not a business. What’s the difference? The latter makes enough money to pay the bills. I get it: products are exciting; commerce is banal and a little grubby. But until it’s a solid business, it’s not sustainable. Building shit without thinking about money? Really fun. But startups like that are just playing dress-up at $1m a year.

Caring too much about what other people think

Some people are really worried about what the competition thinks. Or what their friends will think. Or what’s cool in Silicon Valley. Or even what their investors think. When instead they should be caring about what their users think, and whether they’re staying true to their own vision.

Being in it for the wrong reasons

Is the company being built to flip? Are the people in it to get rich? Is the fun part showboating for the press and the digerati? Are they doing it just to build something they think people should want? Are they high on a Big Idea? God help them.

A high Dunning-Kruger quotient

The heart of the Dunning–Kruger effect is that clueless people can’t tell that they’re clueless. Teams that know that they don’t know much: generally awesome. Teams that think they know it all? Very dangerous.

[Editor’s Note: This is a featured answer compiled from questions on Quora]

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.

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